Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
So I was taking to a loan officer and he told me that I can only use the FHA loan 1 time and for me to use repeatedly I have to switch my fha loan into an conventional loan, so I was wondering what would be the pros and cons of me doing this ? Like once I switch it to conventional after staying in it for a year would I have to stay in the same house another year once i which it over before doing another fha? My goal is to house hack 10 times using the fha method, even though that PmI going to add up through the years cant j still right that Pmi off as a tax right off ?
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
5y
That's not the best advice from a loan officer it's a little vague. You can use FHA more than once but it depends on your move to move scenario. For example if you purchased a primary home and used FHA to qualify and after some time decided to buy again you could go FHA again. FHA allows you to use the process to buy another home if you need to move closer to work, school, out of state, bigger home etc. You would have to qualify debt to income wise but if the purpose of the home fit the guide lines rulebook, HUD 4155.1 You could buy your next home using FHA.
There are a lot of loopholes when buying and using FHA, VA-Military, USDA, DPA-Programs you just need a seasoned mortgage banker who can walk you through the process ahead of time. Reach out to me if you ever have any questions always happy to help bigger pocket members save time and avoid hassles!
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
5y
That's not the best advice from a loan officer it's a little vague. You can use FHA more than once but it depends on your move to move scenario. For example if you purchased a primary home and used FHA to qualify and after some time decided to buy again you could go FHA again. FHA allows you to use the process to buy another home if you need to move closer to work, school, out of state, bigger home etc. You would have to qualify debt to income wise but if the purpose of the home fit the guide lines rulebook, HUD 4155.1 You could buy your next home using FHA.
There are a lot of loopholes when buying and using FHA, VA-Military, USDA, DPA-Programs you just need a seasoned mortgage banker who can walk you through the process ahead of time. Reach out to me if you ever have any questions always happy to help bigger pocket members save time and avoid hassles!
Investor · Boca Raton, FL · Member since 2015 · 234 posts · 103 votes
5y
If you were to refinance, then yes you would have to intend to live in the house another year. If you are to purchase a value add property you can potentially get enough forced appreciation to refinance into a non-owner occupied loan.
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
5y
@Montez B., what @Matthew Brill said. But given your wise ambition, you don't want to refinance each time with just another owner-occupied loan, right?
ie. You need to go for homes where you're able to force appreciation within the time frame of being allowed to refinance out of FHA/Owner-occupied loans.
ie. Only buy Bargains, and/or those with Potential that you can realize. Cheers...
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
5y
@Matthew Brill what do you mean by "non own occupied loan"? Do you mean like conventional loan ? And what all will change on my loan if I switch a FHA loan to a conventional loan ? Will my interest rate be lower ?
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
5y
@Brent Coombs thank you I appreciate your advice a lot ! So your saying for me to refinance to another fha loan I need to find a property that I can add value to that same year with force appreciation before I do that ? Why would I have to do that ? This my first time hearing about the way you saying, thank you
@Matthew Brill what do you mean by "non own occupied loan"? Do you mean like conventional loan ? And what all will change on my loan if I switch a FHA loan to a conventional loan ? Will my interest rate be lower ?
An FHA is an owner occupied loan, meaning you have to live in the property to be able to get the loan. This is a separate loan product from conventional (Fannie Mae and Freddie Mac loans). Conventional loans can be owner occupied or non-owner occupied. If you get an owner occupied conventional loan it will have a lower interest rate and potentially higher LTV than a non-owner occupied loan conventional loan.
Rental Property Investor · NJ · Member since 2016 · 36 posts · 25 votes
5y
Using all fha mortgages means you aren't putting hardly any money into the deal and with prices rising you could be under water in the future. Not a good idea. If you refi to a conventional mortgage the down side is repetitive closing costs, and PMI can be higher than you think especially if you're at 95 LTV. if you already own a primary home fha, I would just save up until you have enough to put down on a conventional mortgage investment property loan. Prices are very high right now, so I would wait and save up for now. Refi your fha mortgage to a conventional mortgage ONLY if you're LTV will be 80% or less, so that you completely eliminate mortgage insurance. Once you have at least 20% equity in your personal home AND at least 4 months emergency savings, THEN look into an investment property. Until then focus on saving up. You can house hack your existing primary residence with airbnb or rent a room to someone..and then use that money to make additional payment to principal on your existing mortgage.
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
5y
There are a few more requirements when a person wants to have 2 FHA loans out at the same time.
1. The new property must be 100 miles away from the previous property or more. Underwriting will be scrutinizing the reason you are moving 100 miles or more away, it has to be a legit reason. I.E. for work relocation.
2. You must have 25/5 equity in the first FHA loan and property. They will require you to pay for an appraisal on that property to prove it.
3. they will scrutinize the size of the property you are coming from vs. the property you want to buy. If for instance you are leaving a much larger home and down sizing on the next home, this can be a red flag.
I closed one 5 months ago, where the couple moved from Texas, where they rented out their home with an FHA loan on it once they left. Moved to the Seattle area and bought a 3 unit. They decided to live in the smallest of the 3 units. Underwriting insisted they occupy the larger unit, because it was the 3 of them, mom, dad, new baby and they couldn't legitimize the fact that they were currently renting a 3/2 home prior to their purchase of the 3 unit and down sizing to a studio. Underwriting refused to fund the deal unless they moved to the larger unit. They finally did and we closed the loan.
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
5y
@Lynne Smith and also how would I be under water in the future? So you don’t think it would be a great idea to house hack every year and get a 4 plex each year for my 10 personal loans I can have ?
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
5y
@Kevin Romines thank you ! It did ! so if you was in my position and my age (24) and you wanted to get into real estate what step would you take ? Would you do the fha thing or just save the 20% I just want to get into Multi family fast and build my portfolio and I feel like me house hacking every property would help me do that, and what if I change my fha to conventional? Then use the fha again instead of having 2 fha loans open at the same time ?
Rental Property Investor · NJ · Member since 2016 · 36 posts · 25 votes
5y
@Montez Blackburn it means loan to value ratio . Loan Amount / Appraisal Value = LTV. To avoid mortgage insurance you need 80% or lower. So for example : 80k loan on a property that appraised for 100k. When you first apply you'll estimate what you think your home is worth and that will be your initial estimated LTV but once your appraisal is completed the true LTV will be calculated. This is usually okay but occasionally when people are cutting it really close they run into issues and then either have to get mortgage insurance or put more money down. For ex in my earlier scenario let's say the house appraisal came back at 98k. The borrower would need to keep the loan amount to no more than 0.80*98,000= 78,400.
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
5y
@Bruce Lynn my credit is 722 is it good enough ? and wow I didn’t thing it was possible to get an conventional loan with only 3-5% down ? What lenders do loans like that 😂😂😂 please tell me !
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
5y
@Lynne Smith wait ! So I can completely eliminate my mortgage insurance if my LTV is 80% when I refinance it to conventional?? I didn't think that was possible but that can take a long time getting to 80% LTV if I only put a small amount down 😂😂💀 now I understand what your trying to say kinda
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
5y
Plenty of lenders have 3-5% down home loan programs. Your first step is getting with a great mortgage broker who can hunt down lenders that do this. They may or may not do it on multi, but for sure do it on single family. Every lender is different with credit scores. Google 3% Conventional loans...and you should get a wealth of information. There are all kinds of different loan products out there depending on your score, where the property is, how much cash reserves you have, how much debt you have and so on. A great mortgage broker will help advise you, based on your individual situation. I would also check with 2 or 3 different ones, because sometimes they will know of or have different programs available.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
It would be impossible to get 10 FHA loans and pointless/costly to refinance over and over like that. FHA is a program designed for first time home buyers and specifically not for investors. As others mentioned, if you are owner occupying there are options for low down payment conventional financing. That is a much better route.
Underwriting requirements will get more intense as you add more properties. They will require cash reserves to pay all those mortgages. I am at the ten financed property limit currently, so I speak from personal experience.
Also be aware as @Kevin Romines stated on getting multiple FHA, it is not just "move closer to work" or "bigger home", but you have to prove it. They know where you work, so it if it not 100 miles from your current locations, you are out of luck. If you say you need a bigger home for your family, your family size has to actually change (new baby, get married, etc.).
@Brent Coombs thank you I appreciate your advice a lot ! So your saying for me to refinance to another fha loan I need to find a property that I can add value to that same year with force appreciation before I do that ? Why would I have to do that ? This my first time hearing about the way you saying, thank you
I agree with what @Joe Splitrock wrote above:..."pointless/costly to refinance over and over like that" (because, conventional non-owner occupied loans can also be low deposit).
My premise of "only buy bargains" is largely so that each time you qualify for your next (low deposit) mortgage, your Loan-To-Value Ratio should still remain below 80% (even though you might have borrowed 95% or more for each prior one), because you bought bargains in the first place, and/or have value-added to each property. Go get 'em...
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
5y
@Joe Splitrock thank you I appreciate it !! And what would be other options for conventional loans down payment wise ? Like wouldn’t my interest rate be extremely high ? I have a 722 credit score ik you need a 740 to get the lowest interest rates possible, and also how long did it take you to get 10 personal loans in your name ? And what option did you take ? You put 20% down on all the properties you purchased?
Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
5y
@Joe Splitrock what if i house hack my property then wait into I have 20% in equity in the property then refinance it to conventional? How you feel about that ?
@Joe Splitrock thank you I appreciate it !! And what would be other options for conventional loans down payment wise ? Like wouldn’t my interest rate be extremely high ? I have a 722 credit score ik you need a 740 to get the lowest interest rates possible, and also how long did it take you to get 10 personal loans in your name ? And what option did you take ? You put 20% down on all the properties you purchased?
I am not sure what the rate impact would be with that credit score. It is still considered a good score. It took us 12 years to hit property ten, generally buying one a year. Mortgage rules have changed over time. Our first one we put 10% down, then 20% and the last 7 we had to put 25% down. It used to be that after four investment properties, the down payment requirement went up to 25%.