Hi BP Community, 

I am new to real estate and am spending most of my time right now researching, learning, and networking as much as I can while working a full time job. My full time job provides pretty good flexibility so I'm looking forward to starting my new RE career. 

My question....my girlfriend and I bought our first home back in September of 2020. We put down 20% and borrowed some money from family. Part of the deal with her family was that I am not on the deed until they were paid back since they put up a good chunk of change for us to get to 20%. Well now they are paid back and I can go onto the deed for our personal home. My question is, should I hold off getting put onto the deed so I can take advantage of an FHA loan for a rental property? I also do still have some student loans, will I still be eligible for an FHA?

Any and all advice is appreciated! Looking forward to hearing some responses. Thanks everyone and have a great day!

-Ryan

@Ryan Arsenault I'm confused.  Did you co-sign the loan with your girlfriend?  And did her family co-sign the loan?  Or did they just provide funds as a gift or loan for the DP?

To get FHA it will have to be a primary residence. Once moved into the new home you can get on the deed for the current one, assign it to your LLC, and then rent that one out. You can use FHA multiple times in your life but only one loan at a time can be FHA, so one strategy is to refi out of FHA before moving on and using FHA for each new door. Downside to that is you have to move each time, but if cash is an issue for you starting out, that makes it an easier path into cash flowing assets.

@Nicholas L.  I did not co-sign the loan nor did her family. My part and their part of the deposit was gifted. Sorry should've clarified! 

FHA loans are for primary residences, so unless you plan on moving into the other home, you would be committing mortgage fraud.

@Ryan Arsenault then you have no loans, and you did not buy this property. You would be eligible to take out an FHA loan provided you intend to live there and abide by the terms of the loan.

Thanks all much appreciated!

Originally posted by @Ryan Arsenault :

@Nicholas L.  I did not co-sign the loan nor did her family. My part and their part of the deposit was gifted. Sorry should've clarified! 

Since you paid it back, it was loaned not gifted. Loaned down payments are not allowed on FHA.

If you paid equal share on the property, I would strongly encourage you to get on the title ASAP. There can be legal ramifications if you are not on the title. You currently have no legal rights to that property. Even if you have a written agreement, by your own admission, you gifted the down payment to her, so you have no equitable interest. 

Another issue could be when you go to rent the property out. If you are not on the loan or on the title, she is the only one who can claim rental income and expenses. I guess she could pass you money under the table, but that is not legal or advisable. 

Why do you need FHA loans at all? With 20% down payment, you should have just gotten an conventional mortgage. Even going forward if you want low down payment, there are 3.5% down payment options on conventional.

I am sure you love/trust her, but weird things happen all the time. Protect yourself legally and get on that title. Try to play by the rules, so you don't wind up in legal trouble down the road.