FHA Loan for Multifamily

5 Replies

Do you think is wise to use an FHA Loan to buy a Single Family residence, live in it for 1 year, and then rent it afterward if it meats the 1% rule (or greater)?

@Juan Rosado this is complete fine. Keep in mind that when you buy a primary residence and then rent it the rent profit will not be the same as buying an investment property. Meaning, with an FHA loan you can use 3.5% down. Your loan will also have PMI attached to it. So if you were buying an investment property outright, and not living in it, your down payment minimum is now 15%. So your mortgage payment will be less.

Also, if you have one FHA loan, and need another FHA loan, you'll need to be moving outside of your commuting area or have another specific reason of needing another FHA loan again. So you might be limited to receiving a conventional loan on your next primary home. Which means 5% down minimums.

You can do exactly what you are describing but feel free to ask any additional questions that you might have.  Thanks!

Originally posted by @Andrew Postell :

@Juan Rosado this is complete fine. Keep in mind that when you buy a primary residence and then rent it the rent profit will not be the same as buying an investment property. Meaning, with an FHA loan you can use 3.5% down. Your loan will also have PMI attached to it. So if you were buying an investment property outright, and not living in it, your down payment minimum is now 15%. So your mortgage payment will be less.

Also, if you have one FHA loan, and need another FHA loan, you'll need to be moving outside of your commuting area or have another specific reason of needing another FHA loan again. So you might be limited to receiving a conventional loan on your next primary home. Which means 5% down minimums.

You can do exactly what you are describing but feel free to ask any additional questions that you might have.  Thanks!

 "you'll need to be moving outside of your commuting area or have another specific reason of needing another FHA loan again"

Could I keep that first property (the one being financed by FHA), move to another location and apply for another FHA loan there?

@Juan Rosado yes, you can move outside of the area and receive another FHA loan. There's no hard rule to how far "commuting area" is but I think if you were moving about 1 hour away in the DFW area that would be fine.

Originally posted by @Juan Rosado :

Do you think is wise to use an FHA Loan to buy a Single Family residence, live in it for 1 year, and then rent it afterward if it meats the 1% rule (or greater)?

I would add that I don't know the lender overlays, but you may be able to refinance the home into a conventional loan( perhaps with as little as 5% equity I'm not sure). Then you will be free to purchase again using FHA.