Does househacking make it more difficult to buy future residential real estate?

Question

If you do the math, even best case scenario in househacks where you are profiting $1-2k per month, your debt to income ratio is still increasing (assuming your W2/1099 dayjob income is about the same). So when you are qualifying for future mortgages, lenders will find you less desirable because you're increasingly getting more leveraged and your debt to income ratio is increasingly getting worse. So you will likely get worse terms, if even approved for a loan. Am I missing something here or is it indeed the case that househacking makes it harder to qualify for future residential real estate?

Daniel Toshev · Answer

Well, the whole point of a househack is the low down payment and lower interest. If you have the 20-25% and couple extra points on the rate you don't need to househack.

.  I'm on my fourth and it does get more complicated. I sign a future dated (2-3 months) lease for the unit I'm currently living in before I go for pre-approval. Or rent out the extra bedrooms

Rick Albert · Answer

I've done two house hacks and invest out of state. You're fine.

It's all about the debt to income ratio. As long as you meet it, you can have generally up to 10 loans (each lender is different) unless you go the DSCR route.

Talk to lenders about this. They will be your best resource.

Adrian Lammersdorf-Scioll · Answer

I've done 2 house hacks as well now.  With FHA being very generous on DTI, I wouldn't worry about it.  I qualified for my 2nd one even without having my first place be rented out.

Matt F. · Answer

1. The concern you mention is not exclusive/specific to househacking. Any investment which affects DTI ratio would potentially factor in similarly depending on the specifics of the financing. 2. When you reach an impasse on DTI ratio, many investors bundle their investments into a commercial loan/portfolio loan.  Assuming there has been appreciation, natural and/or forced, and assuming the properties are fully rented, there's likely to be a way forward that gets them out of your personal name. 3. I've never heard someone say, "House hacking really messed up my real estate investing career."

Ashish Acharya · Answer

@Michael H., It is opposite. House hacking usually helps rather than hurts future qualification. Lenders often count about 75 % of lease rent to offset the mortgage. Depreciation on Schedule E is a non cash expense that gets added back for DTI. Paper losses can lower taxes without lowering qualifying income. What can hurt is large current year repairs and vacancies. Capitalize improvements when allowed so the hit becomes depreciation. Keep leases rent deposits and clean bank trails. Allocate personal and rental expenses correctly. For 2 to 4 unit primaries lenders may use lease or appraiser rent schedule at purchase. Done right house hacking often improves DTI and terms.

Nicholas L. · Answer

@Michael H.

it's going to be heavily dependent on your personal situation, and the requirements of an individual lender, but yes, it could make it more difficult to qualify for conventional lending.

with that said, a lot of us use DSCR loans and there, your DTI ratio is not a factor.

so i wouldn't let this be a blocker to house hacking.  it's a powerful way to build wealth.

Kate Nixon Taylor · Answer

When you move out, your income from that property will be factored into your DTI, so that helps with making more space for the next house hack. Once you max out your DTI, you can refinance rentals off your DTI that make sense with DSCR or buy properties from there with DSCR products. The rates for DSCR aren't that much higher than conventional if you have a good credit score, so manage your credit well and you will find those rates approachable.

Always happy to connect and run scenarios! Cheers, Kate

Jimmy Lieu · Answer

Hey Michael, good question and it’s something a lot of people overlook when getting into househacking. In most cases, lenders don’t just look at the debt side—they also factor in the income from the property. So if the property is rented out or has strong rent potential, they’ll often use a portion of that income to offset the debt when calculating your DTI, which can actually help rather than hurt your borrowing power. How much of the rental income they count depends on the lender and the loan product, but typically they’ll use somewhere around 70–75% of the documented rental income to offset the mortgage. So while your total debt does increase, your qualifying income can increase too, which can keep your ratios in check or even improve them if the deal cash flows well. It’s not automatic or guaranteed—you do need solid documentation—but househacking doesn’t necessarily make it harder to qualify for future loans. Happy to connect and answer any questions you have!

Does househacking make it more difficult to buy future residential real estate?

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