Has anyone househacked multiple times using a FHA loan?

Question

I am curious if anyone has house hacked multiple times using a FHA loan. Do you have any advice for someone looking to use this strategy to build wealth?

Matthew Porcaro · Answer

The 203k allowed me to build in the equity I needed to buy more property. I didn't have too large of a down payment, but wanted to build equity on a fix and flip. This allowed me to do that with only $9500 out of pocket.

I was able to find a deeply distressed 2-family that allowed me to househack initially, as well as qualify for a higher loan limit since FHA loans like the 203k allow you to forecast your future rental income as your total income which ups your allowable loan amounts.

I basically did a househack and live-in flip at the same time using the loan.

As long as you have a good lender that has done plenty of these (there's a bunch of them out there, you just need to know where to look), you'll find that the process is not nearly as daunting as people make it out to be!

Andrew Freed · Answer

@Matthew Porcaro - Thanks for the insight. I'm more looking to utilize a buy and hold strategy rather than flipping. My goal is to buy a new multi-family every year for the next 10 years.

Also, I am in the process of getting my real estate license hence w/ a FHA loan and the 3% commission, I would only have to pay .5% out of pocket due to the low down payment requirement of 3.5%

I see that you have been successful with a 203k loan. How has this strategy worked out for you? Do you recommend a loan like this for a multi that may need significant work?

Matthew Porcaro · Answer

@Andrew Freed

FHA’s aren’t meant for flipping, and underwriters will catch what you’re doing if you make it an obvious pattern.

If you’re househacking an underwriter is going to ask why you’re moving into another multi-unit property if it’s not far from your current because of job transfer or something like that.

What I found is if you buy the first one right, you can set yourself up with equity and cash flow to finance your future deals with other more conventional or investor friendly methods. (Private money, hard money, etc)

Hope this helps!

Stephanie P. · Answer

@Andrew Freed

Go with FHA if you're doing units, but if you're moving into a sfr in a year or two, just go with a 5% down conventional loan.  You'll save money on the mortgage insurance.

Alexander Szikla · Answer

You simply need to refi every few years if the initial FHA property can substantiate it.

Dave Spooner · Answer

@Andrew Freed I've done it but it's very challenging to do on your own. There are only a handful of reasons you can get a second FHA loan:

• You’re relocating due to a new job opportunity.
• Your new home is more than 100 miles from your current FHA-financed home.
• You need a bigger home to provide for a growing family.
• You’re getting a divorce and your spouse is staying in the current home.
• You were a co-borrower for someone else's FHA loan and want to buy your own home.
• You're not using FHA loans to build an investment portfolio.
• You're buying a HUD real-estate owned (REO) property.

(Source: https://www.lendingtree.com/ho...)

For my own rentals, I invest with a handful of other people. More than one of us has used an FHA to buy multi-families (even better, look into the 203k if you're not familiar).

Sam Lewis · Answer

It is doable with straight conventional, but FHA you typically can't have more than 1 in your name at any given time, unless there is an extenuating circumstance that a lender may be more familiar with

Andrew Freed · Answer

@Dave Spooner Super good insight and resource. Thanks David!

@Alexander Szikla  Makes sense, thanks for the advice. I was more thinking along the lines of refinancing out of my current FHA loan and get a new one every year. I was hoping there are some conventional loans that I can have 10% equity or even 5% and get out of the FHA loan that I am currently in. Heard of anything like this?

Has anyone househacked multiple times using a FHA loan?

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