Hi, I am a newbie; I have saved 150K and want to invest. Please let me know if my steps would work:
1) I get investment properties (with 20 or 25% downpayment) and then I get a FHA loan on a fourplex property (next year) and stay in one of them (this will be property in the state where I live - NJ) --- main question - will I get a FHA loan (assuming I meet all the criteria and have saved up 3.5%) if I have investment properties bought just a year or so early?
Yes. I would confirm with a lender to be 100% sure, but people use FHA to build their portfolios year after year. Once you refi to that conventional loan, you can start over. The major key with FHA is that you live there in at least one unit for a year minimum.
Yes. I would confirm with a lender to be 100% sure, but people use FHA to build their portfolios year after year. Once you refi to that conventional loan, you can start over. The major key with FHA is that you live there in at least one unit for a year minimum.
Looking at my FHA cheat sheet my mortgage guy had laminated for me:
1. Minimum credit score 580. In some cases under 580 but work closely with the loan officer.
2. Minimum down payment 3.5% (except first time home buyer--haven't bought in past 3 years--then 3%)
3. DTI: no max if approved through AUS.
4. Gift funds: allowed.
5. Seller concessions: up t 6%
6. Mortgage Insurance: required
7. Maximum loan amount: varies (see your loan officer)
8. Occupancy type: Primary only.
Advantages:
1. Lower interest rates than other loan types.
2. Lower credit score requirements.
3. Higher DTI ratios than conventional.
4. Renovation loans (203K) are available.
5. Monthly MI is typically lower than conventional.
6. WDOs, water tests & sewer inspections not required.
Disadvantages:
1. Upfront MI fee of 1.75% (rolled into the loan).
2. Unless 10% is put down, MI will last for the life of the loan.
3. Any repairs noted on the appraisal are required to be fixed.
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So what I see is that as long as the occupancy of the FHA-financed property is primary, the existence of other investment properties should not be a deal-breaker.
Fairly certain you can get a new FHA loan after a year or a conventional refinance, so shouldn't be a problem! A bigger problem may be the cap on FHA loans if you're looking to purchase a 4plex in a high value area. I've also found a couple workarounds to the investment loan higher down payment. Currently working on a large deal with only a 15% down payment.