Would it be smart to use an FHA loan on a house that I won't be living in full time but then looking to rent it after the first year? With not enough cash to put down a 20% down payment, I was thinking this might be an option and take a hit over the course of the year and then start building cash flow in Year 2 to save up for another property. The second "home" would only require a 10% down payment, correct?
New to Real Estate · Boca Raton, FL · Member since 2019 · 27 posts · 37 votes
7y
There is absolutely nothing wrong with FHA on the first home. Besides the PMI payment, which may not be a big deal if the cash flow is good enough. At the end of the day, you can easily refinance after a year to a conventional, if you choose to by building a little bit of equity in that house.
The second home maybe require 10% or 20% or honestly something else. That all depends on the lender and what you guys can work out. There are so many different kinds of loans to be offered. If you can refinance that first home before you purchase the second, you can technically even get another FHA.
@Nick Santamaria 3.5% down FHA is for owner occupied. If you are not going to be there full time for a year you will be committing mortgage fraud. Your second owner occupied can be 5% down. If I was starting over I would look at owner occupying a small multifamily 2-4 units with 5% down and move every year for 10 years. End up with 20-40 doors with minimal outlay.
Would it be smart to use an FHA loan on a house that I won't be living in full time but then looking to rent it after the first year? With not enough cash to put down a 20% down payment, I was thinking this might be an option and take a hit over the course of the year and then start building cash flow in Year 2 to save up for another property. The second "home" would only require a 10% down payment, correct?