How does a high LTV affect future opportunity?

Question

I'm interested in financing a multi-unit property in the Boston area with an FHA 30-year loan.  This may mean a $400k+ loan with at least 3.5% down.

How would this 96.5% LTV affect my ability to obtain future financing?  Will future lenders take this into account or does my monthly DTI / net worth matter more than the LTV of a particular loan?

I don't want to over-leverage, so I'm considering buying remotely and financing with a conventional loan at 80% LTV.  I'm hoping this increases my risk tolerance and marketability to lenders.

Any thoughts?  Thanks in advance!

William Sullivan · Answer

@Wayne Brooks Thanks for the feedback!  That's a good point.  I hope to keep driving costs low in either case:

This might be naive on my part, but if I invest remotely, I'm hoping to get my feet wet with a turn-key property with a property manager.  I was thinking the remote property may be more passive than the house-hack FHA.  Is that a realistic expectation?

Hoping to use cashflow from the investment to help fund my living expenses and build equity through appreciation.  Cash flow would be my priority for this first property.

Brian Garrett · Answer

I would house hack any day over buying a turnkey property where you have no equity and minimal cash flow.

Wayne Brooks · Answer

"DTI" matters more.  "Driving", not so much....darn autocorrect.