Hello all. I'm a newbie looking to house hack a duplex. I am a first time home buyer. I was hoping to put 5% down on a conventional loan, but the lender told me that post Covid-19, 15% down is the minimum on a multi-unit, even if it it will be owner occupied. If I put 15% down, I would just about drain my savings/cash reserves. Should I just go the FHA, 3.5 % down route to get some skin in the game? I know I'll have to pay PMI, but I would save my cash reserves. Please share your thoughts.
Curious. Would you not pay PMI on a conventional loan too since it's below 20%.
From my understanding , the FHA PMI never goes away even after LTV is over 20%.
Conventional its goes away after LTV is 20% and above.
@Brian Singh I would pay PMI on less than 20%, but I know it would go away with conventional. My main concern with putting 15% down is draining my cash reserves, not paying the PMI. I know the PMI stays for the life of the long with FHA, but I'm considering it for the lower down payment option.
Have you spoken to other lenders?
@Kris L. I’ve spoken to two so far. They both have said the same thing.
@Candice Scoby I have a client here in Connecticut that just went under contract on an owner occupied property with a 5% down loan with Quicken Loans. Try them.
@Michael Noto thank you. I will give them a try
@Jaysen Medhurst thank you! I guess I won’t allow myself to become discouraged so quickly. I will do my due diligence.
It can work. I’m closing on a conventional 5% in 2 weeks, but I had to talk to about 15 lending institutions to find it.
@Candice Scoby Is this duplex one you plan on adding value to through a rehab or is it move in ready? If you can purchase it with a FHA I would go that route, especially since your rent should be covering the majority of your mortgage anyways. If it is a value add you can do the renovations and then refinance at a later date to hopefully drop the pmi. Ya I know paying PMI sucks but if it gets you in the game and it's being paid by your tenants anyways then it's not so bad. They are also buying your duplex for
You essentially. Good luck, stay the course!
@Candice Scoby I’m a newbie as well, wondering how you’ve found duplex deals to evaluate?
I told a realtor my vision and she searched duplexes in my area. I narrowed down the ones in the areas I could see myself for at least 2 -3 years.
@Jeremy Blevins it’s move in ready. Thank you for your encouragement. I’m a little nervous, but investing takes courage.
@Candice Scoby yes, you can go FHA on the duplex. I'm doing the same thing and close on the 26th. I don't want to drain my savings and plan to refinance in 2 years with a conventional to get rid of the PMI on the FHA. I may do it sooner but I have to live in the property atleast a year per FHA rules.
@Nicole Morant congrats on your upcoming closing. I just may go that route. Thank you