How do I Finance my "First" MFR House Hack/REI?

Question

Hi! I'm interested in purchasing a multi-family residence (duplex?) in Sacramento. Why?

I'd like to a) start investing in real estate, and b) if I have to pay for housing, I would love to have some help paying a mortgage (hello, house hacking)! My challenge is that three years ago, I signed onto the deed and mortgage of my mother's home (our family house) to help her refinance and consolidate debt, without really understanding what that would mean for me when it came to buying my own property -- so I technically "own" a home already.

Now that I'm looking into ways to purchase a property for myself (I can potentially qualify for something in the mid 400s) I'm running into some roadblocks.

A lender I spoke to told me that I do not qualify for an FHA because the house I "co-own" is within 100 miles of where I would be purchasing, and the only way that I can make a true duplex work is with a conventional loan and 15% down (which I do not have). Fortunately, my mother is moving, and we'll be renting out her house starting April 1, so that covers me on the DTI part, but I'm trying to figure out if there is a way that I can purchase an MFR so that I can live affordably in Sac, have REI, and not break the bank.

Any advice? Thanks in advance!

Ashley C. · Answer

Hi @Anthony Katsonis!

Thanks for your response! It's helpful to know that other folks have kept pushing through to success :-)

I've spoken to two lenders thus far, but as you said - perhaps I will keep asking! Yes, who was it that you worked with?

I don't have a specific property in mind, but have looked/seen at a couple places in West Sac, Fruitridge area down towards Oak Park/Midtown.

Anthony Katsonis · Answer

@Ashley C.

No problem! Yep, it takes what it takes to make it. That FHA 100 mile rule is legitimate to the best of my knowledge, that may be a hard hurdle to get past. But who knows, there may be other options other than FHA. Love the Midtown area, and Oak Park has come a long ways. Hope you can make something work! Best of luck!

Anthony Katsonis · Answer

@Ashley C.

I like your game-plan, my wife and I have implemented a similar strategy with great success. And kudos to you for being such a good daughter, btw. I would like to think I would do the same for my mom if she was in need of some help.

My first question is, have you spoken with any other lenders? I'm of the belief that if there's a will, there's a way. We've been turned down by multiple lenders in the past for a loan and on the fourth one, he was able tot get us a pretty good loan. I'd be happy to give you his info if you'd like.

Do you have a specific property in mind?

How do I Finance my "First" MFR House Hack/REI?

3 Replies