Having Issues with Loan on First Deal

[Jack Perfett]

So about a week ago I was able to put my first deal (duplex house hack) under contract! My agent brought me this deal as an off market deal and the numbers worked out great. Inspection report came back good and the seller agreed to fix most of the issues on the list. My offer was accepted with a 5% Fannie Mac conventional loan as I felt this would be more appealing than an offer with an FHA loan. Everything was working well until my loan officer said that I would now need a co-signer to supplement for my income because my income we were using before was projected income that won't start until May. He said that projected income can only be used if I am purchasing a single family residence not a multi family. My two options are to get a co-signer or to switch to an FHA loan. I am nervous that by switching to an FHA loan this might scare the seller as there are some things on the property that might not pass FHA inspection. Would love to hear if anybody has been in this position before or is willing to offer advice.

Thanks in advance!

[John Warren]

@Jack Perfett I would jump on a call with your agent and lender, and attorney (or title agent if you are not an attorney area). Here in Illinois, there are no red flags until late in the process that would alarm a seller. If you switch, you just have to get the FHA addendum. What I have done in these circumstances is get all the way to where the last condition for clear to close is the addendum, and then send it over with a tentative closing date.

The only thing to keep in mind is that there may be cosmetic issues that could be an issue for FHA. Most FHA issues are really silly like peeling paint, etc. Sellers hate dealing with this stuff since they really don't have too in a sellers market.