FHA or NACA For First Time Househack?

Question

Hello! It's time to roll up my sleeves! I am looking at different first time homeowner programs to get into my first house hack!

I know with

FHA

3.5% down with seller assist up to 6%

Smoother process (I heard) than NACA

Since it's federal of course there is a lot of red tape

Have to stay for 1 year

NACA (still need to do more research)

0% down , no down payment, no closing costs

Longer drawn out process than FHA

Have to stay three years? ( not sure on this one)

Buy out clause close to 25k?

I would like to get into a fourplex but a duplex would do! However there are duplexes and a fourplex that I could get into. I want to get into something by the end of the year.

Should I go with FHA since they are more proven and used in the investing community and possible get into my house hack quicker?

Should I got with NACA that would help me preserve capital, but have a longer process, but possibly have me in the same place for 3 years which is what I don't want lol

What do you guys think? Thanks in advance!

Phil G. · Answer

NACA offers a great mortgage product if you take advantage of the interest rate buy-down.  The process can be long and clumsy.  NACA mortgages require that you remain an owner-occupant as long as you have the NACA mortgage.  They will place a junior lien on the property to ensure that you do.

if you can swing 5% down (on 2-4 units) and you're a first time buyer, you might look at Freddie Mac's Home Possible mortgage.  There income limits, but some areas are exempt based on the demographics of the census track.  You can check eligibility here:

http://www.freddiemac.com/homepossible/eligibility.html