1st Time Homebuyers

6 Replies

My husband and I would both be considered 1st homebuyers however we both would like to get into real estate investing. We're unsure on whether we should move forward with the programs or should we just focus on purchasing our 1st investment property?

There are some really good programs out there for first time home buyers - but it depends a lot on what you want to accomplish. Do you want to buy your own home or are you content with renting and investing in a rental property? 

If you want to purchase an investment property, then what do you want to accomplish with it? Are you looking to add to your monthly income or build a portfolio?

If you can solidify what you want to do and where you want your investments to take you, you will be in a better position to decide which programs will help you to reach your goals. 

We want to build a portfolio and we don't have a problem with living in the house but we aren't sure how long we will be there. We may move out of the state. BUT we don't want to lose our opportunity to take advantage of the 1st time home buyers programs. I think once you purchase a property you're no longer eligible.

@Shaquetta Chittams  Unless you are referring a local state/county/city incentive/assistance program, there is no "program" for 1st time home buyers on the mortgage side. As a 1st time home buyer you can get a conventional mortgage with just 5% down, but that's about it.

You can get a 3.5% down FHA loan at any point, as long as the property is owner occupied.

Can you please be specific as to what you are referring to when you say "programs"?

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

Yes, I am referring to a local state/county/city incentive/assistance program. We are also looking into the option of a FHA 203k. It's our understanding you only have to live in the property for 1 year which we can definitely do. But with the other option we can get up to 20k in incentives but I think the programs require a longer commitment and we are unsure of where we will be that far out.

Hey @Shaquetta Chittams ,

I am newbie and I a similar boat to you and your Husband. Have been grappling with the same situation here in Virginia about how to get into the investing side of things.

Heres what I know. We will be using a 'conventional 97' to put 3℅ down. This gets us in the door cheap considering closing cost of about 3℅ and ONE CAVEAT! The 97 loan requires putting into escrow a one time payment of an annual premium (total of what your year's monthly payments would be) at closing. Plus you have to put into escrow 2 mounths worth of a monthly premiums (paid on your 97 loan just like having PMI on an FHA) as well as 2 mounths of home owners insurance. Here are some example numbers my banker and I where looking at yesterday:

150,000 home w/ 3℅ down = 4,500

3℅ closing cost (Aiming high here) = 4,500

Escrow costs: 55 monthly for loan premium. 

Multiply premium by 12 for annual premium payment to = 660 (a one time charge essentially)

Then 2 months each of your loan premium @ 55 and say home owners insurance @ 50.

(2x55) + (2x50) = 210 

So escrow = 870ish

Down payment = 4,500

And closing = 4,500

Of course you should have some RESERVES, but all in all your costs are under 10,000.

The point of all this is to say that FHA is expensive in comparison when you have to pay PMI and an upfront charge of 1.75℅ and then an annual 1.25℅ charge. In addition there are some funny rules about owner occupancy related to FHA and that CA. Just slow you down.

A really big thing to think about Shaquetta is that in order to avoid Capital Gains Tax you must live in a property for 2 out of 5 years before selling. That could change your investment strategy.

Have you heard of BRRRR? If you are thinking of a 203k than BRRRRing it may be the best way to build your portfolio.

Any who, hope this helped.

Again I am a newbie so talk w/ your bank too!


@Dylan Farish I've heard of BRRR but I'm not completely familiar with how it works (googling now!). Also, I didn't know "to avoid Capital Gains Tax you must live in a property for 2 out of 5 years before selling." That may change things. I was under the impression if you use the profits to invest into another property you wouldn't have to worry about the capital gains tax, but I could be mistaken. I'm really new to all this. But you've definitely given me something to think about. Good Luck! I'd love to hear about your progress.