FHA Eligibility and Bonus HELOC Situation

[Adam L.]

As a newbie, I was wondering if seeking a conventional loan for my first rental property will affect my eligibility in the future to get a FHA loan to purchase my first primary SFR?

I have never owned a home and my newlywed wife owns a condo, which we plan to sell in the future to buy a home. 

As a bonus question, she own the condo outright for $270k and is cash flowing $850/month. Would it be advantageous for us to try to get a HELOC on this property to purchase our new SFR rather than selling the condo?

[John Warren]

@Adam L. you should definitely use your conventional loan before you use an FHA. It will not mess up your ability to use FHA financing in the future for your "forever" home. In fact, I normally recommend my buyers in the Chicago burbs use the conventional loan for their first house hack. They can then transition to FHA later on for their second house hack or for their primary home.

You may find, though, that FHA financing is not the best option once you look to acquire your home. Most buyers with strong credit end up with better loan terms through the conventional program.

As of your last question, I think whether you sell the condo or not is really a matter of personal preference/investing philosophy. If you are really cash flowing $850 per month (including maintenance and CapEx) then you are making a 3.7% return on equity annually. You should have no trouble deploying that equity to get a stronger return in other ways.