Sounds like you are working with a lender who has too many "Guideline Overlays" & a is bit too rigid on their Underwriting.
I have done many purchases for my clients who own homes within a 50 mile radius. Please feel free to contact me directly if you have any further questions, I'd be glad to help.
All the best,
Roswell Moore, CMPS
Certified Mortgage Planner
Scottsdale, AZ 85260
NMLS ID 263779
We are a Direct Lender, Mortgage Bank where we originate, process, underwrite, fund, AND SERVICE our loans, in-house, with FHA (starting at a 580 score AND still only 3.5% down), FHA Streamline refinance loans (NO minimum credit score, NO appraisal required), HARP 2.0 - No Appraisal Required for Refinance for Underwater Home Values, HomePath, Investor Friendly (10 financed properties), VA, VA Refinance loans (NO appraisal required on IRRRL loans), USDA loans, Jumbo loans, Conventional loans, plus, we allow Escrow Hold-Backs!
I ran into the same situation years ago. My Realtor and I were able to demonstrate to the lender (to the underwriter) that the new purchase was indeed going to be my primary residences. I don't know if you'll be able to do the same.
But that's what the problem is.
Hope that helps.
Coldwell Banker Residential Brokerage
If you would like the names of several great lenders in the north Glendale area, please feel free to contact me. Cind@CindyMartinAZ.com
I think that you need to consult with another lender...as noted by Roswell below (guidelines may be too strict) I have represented clients with more than one home with no problems. If you are moving into a bigger home, no mortgage etc.. and it is not counted against your DTI you should be good to go, if you would like information on a lender that will guide you effortlessly through this process feel free to reach out to me...
But if in fact you are looking for a home that you will live in than an explanation maybe all that is required. The explanation could be that it; will be a larger home, that it will have more bedrooms, your family size has grown and you require larger home, Or that it will be closer to your work and or school.
The lender will factor in the current taxes and insurance cost of you existing home to determine how much you would qualify for on the new purchase.
I would get a second opinion from a different lender/broker, Give me a call I can provide you with a few names of good loan officer's. I can be reached at 602-531-3787.