Fha loans

11 Replies

Im looking to buy for first multi-family house with an FHA loan. My question is should I wait 3 to 5 more years to save up 20% downpayment or would it be a good idea start with 3.5% down? I do feel like I should put 20% down but I also don't want to wait that long. Is an FHA loan for Multi-families a good way to go? Thanks for reading this and answering my questions.

Buy now, and in 3 to 5 more years you'll have saved 20% for another property! ;-)

I'm about to purchase my 3rd property and I'm doing an FHA loan for a multifamily property. You can only get up to a 4 unit property, which is what I'd really like to get. One recent change to the FHA loan is that you have to pay the PMI for the life of the loan. But if you can get 20% equity into it, then you can refi into a conventional loan and repeat the process! That's my strategy anyways.

@Derone Patterson

I'd opt for the FHA loan instead of waiting, IF the numbers make sense on what you're trying to buy. Are you "house hacking?" That is, are you planning to buy a 2-4 plex, live in one unit, and rent out the others? If so, that's a great plan. Just make sure that the numbers make sense, that you're not buying at the top of what you can afford or are using numbers that are too optimistic.

FHA is a great way to get started when you don't have 20%. In the five years that you'd have to wait for option 2, you would lose out on principal pay down for sure, rental income and possibly appreciation if your market appreciates.

Good luck!

I don't recommend waiting. Think about it, use the profit you make from the property and in 3-5 years you can get more properties.....no brainer! I'm actually in the process of doing the same thing. Good luck!!

If you buy the property under market value with a FHA loan you may be able to refinance into conventional sooner then your mortgage lender or bank have lead you to believe. Example you buy it at 85% of FMV (fair market value) lets say from a deal you acquired through a wholesaler for a fee equaling about 2% of the sales price so you're in the deal for 87% of loan to value (market value).

From this example you'd only need to pay the loan down to 75% LTV to qualify for a refinance with no MI (conventional financing).

Or you can go MCM conventional and still refinance with no monthly MI as well (cannot own any other property). "my community," fannie mae program.

The problem is most lenders are not creative enough to figure out how to structure a deal to yield the most effective ROI but there literally many more ways to structure the deal to achieve the most effective results.

Originally posted by @Samantha Hiscock :

Buy now, and in 3 to 5 more years you'll have saved 20% for another property! ;-)

 Thanks that makes sense.

Originally posted by @Nathan Richmond :

I'm about to purchase my 3rd property and I'm doing an FHA loan for a multifamily property. You can only get up to a 4 unit property, which is what I'd really like to get. One recent change to the FHA loan is that you have to pay the PMI for the life of the loan. But if you can get 20% equity into it, then you can refi into a conventional loan and repeat the process! That's my strategy anyways.

 Thats a good strategy, Im going to do that, Thanks

Originally posted by @Andreas Mirza :

@Derone Patterson

I'd opt for the FHA loan instead of waiting, IF the numbers make sense on what you're trying to buy. Are you "house hacking?" That is, are you planning to buy a 2-4 plex, live in one unit, and rent out the others? If so, that's a great plan. Just make sure that the numbers make sense, that you're not buying at the top of what you can afford or are using numbers that are too optimistic.

FHA is a great way to get started when you don't have 20%. In the five years that you'd have to wait for option 2, you would lose out on principal pay down for sure, rental income and possibly appreciation if your market appreciates.

Good luck!

 Yes i plan on living in the property. And thanks for the info. Very helpful 

Originally posted by @Albert Bui :

If you buy the property under market value with a FHA loan you may be able to refinance into conventional sooner then your mortgage lender or bank have lead you to believe. Example you buy it at 85% of FMV (fair market value) lets say from a deal you acquired through a wholesaler for a fee equaling about 2% of the sales price so you're in the deal for 87% of loan to value (market value).

From this example you'd only need to pay the loan down to 75% LTV to qualify for a refinance with no MI (conventional financing).

Or you can go MCM conventional and still refinance with no monthly MI as well (cannot own any other property). "my community," fannie mae program.

The problem is most lenders are not creative enough to figure out how to structure a deal to yield the most effective ROI but there literally many more ways to structure the deal to achieve the most effective results.

 Thanks for the info. 

Originally posted by @Kyle Evans :

I don't recommend waiting. Think about it, use the profit you make from the property and in 3-5 years you can get more properties.....no brainer! I'm actually in the process of doing the same thing. Good luck!!

 Yes thats a good idea. Thanks

My first home was a FHA since then I've sold that home and using the money to start my REI career

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