I am looking to purchase my first property owner occupied and cash out after 6 months to turn into a rental. I received a pre-approval for $198,500 at 3.250% for an FHA loan. I will need to bring to the table $12,725.56 for the 3.5% down payment and all closing costs. I am looking to finalize the contract to purchase the home.
What are my options to come up with the $12,725.56 for the out of pocket costs with an FHA loan?
Thank you for your help in advance!
You could apply for a line of credit to help come up with the money but your debt to income ratio needs to remain under 40%
Is it your first home purchase? You can use an IRA with minimal taxes if you have a retirement account only if you're a first time home buyer, worked out very well for me using that method. Or if not then you can always use trusty old "other people's money" and work out a deal to pay back the borrow.
On a side note, my purchase was very very close to identical to yours, even in purchase price and with all do respect, that seems pretty steep with 3.5% and the closin costs combined. Maybe want to ask and see what they closing costs are alone, see if they are a bit on the steep side. Anywho, congrats again and hope this helps!
Ask friends or family for gift funds. you should honestly think about coming up with the 12k yourself though for your first purchase. Remember you also need to have at least 6 months of escrow and mortgage payments in an account.
I agree with @David Zheng that you need to have reserves. Don't be "that guy". You know, the one who buys the most expensive house he can qualify for and then can't pay for a leaky faucet or a month of vacancy. If you are looking to borrow your down payment that is a clue about how your reserves are looking and you may be setting yourself up for failure.