Househacked first single family home.. quickest way to next deal?

12 Replies

Hi there,

My wife and I just bought our first SFH and have two renters (one in each of the upstairs bedrooms). What is the least money we can put down on another single family or duplex?

First purchase was with conventional loan and FHA does not allow for MFH purchases. Willing to move into new purchase and rent the house I just bought, but is 20% the least we can put down?

Thanks beforehand for any tips!

Scott

@Scott Revey I honestly wouldn't think there is a minimum percent you're "allowed" to put down, if that's what you're asking. The reason that they ask for 20%, is because the bank will only finance 80% of the appraised value on an investment property. If you're refinancing an investment property, most will actually only finance 75% of the appraised value. I'm sure a bank wouldn't turn down a higher down payment, if you're willing to do that.

@Scott Revey I think I may have misunderstood your question. Are you asking because you want to give more than a 20% down payment? Or are you asking if there are loans that will allow you finance with a smaller than 20% down payment? 

I'm not sure if my questions are making sense. Please let me know if I'm being confusing.

@Scott Revey after you live in your current home for at least a year (as far as my research has shown me), you can move out and buy another owner-occupied residence at 5%, assuming you qualify. 20-25% down is required on properties that you are not going to live in yourself. 

I too am house-hacking my 3 bedroom condo through roommates, and once I live there for a year or two, my plan is to get a 2-bedroom live-in flip with another 5% conventional loan, while fully renting out my current condo. Once I live there for a year or two and complete the renovations, then I will rent that out, and move onto the next place at 5% down. Lather, rinse, repeat. 

My personal real estate goal is to have enough cash flow to at least cover the mortgage on a primary residence that I want to stay at for a long time, effectively living for free forever. 

Not sure if Tennessee has special rules, but you're allowed to FHA a multi-family. Many lenders don't have experience with this and will tell you no. My lender told me this till I sent them a link explaining they were allowed. I received the pre-approval shortly after :)

Adding onto what @Michael N. said: From my research on BP, banks treat multi-family the same as single-family UNLESS the structure has 5 or more units. But for quads and under, you can use FHA as long as you use at least one unit as your primary residence.

@Derek Luttrell , @Michael N. , and @Nicole Heasley , this was my first time posting a question to BP and the three of you have given me a confidence boost to get back out there and find that next deal! Thanks so much for the insight.

I too have found that lenders have been hesitant to use FHA on MFH, but the reason why was always different. Looks like I just need to keep evaluating lenders!

I'm in TN. I use a HELOC to purchase properties. You could ask your bank about those. First Bank is who I use and they let me go 80-85% of appraised value. If you could get 5% down on next property jump on it. FHA does allow 3.5% down on some programs.

Nice to read the above discussion. On FHA loan, how many times can you use it after the first deal of FHA is closed? I want to hear your insight BP family...

You can get an FHA loan every 12 months, however you can only have one FHA loan at a time. Would have to refinance out of the previous one before getting another.

@Scott Revey

FHA will allow a multi family purchase with 3.5% down but you will have some hoops to jump through to get the underwriter to believe that you're moving from a single family property to a multi family. Most people go the other way.

You can also have more than one FHA loan at a time, but you have to get an exception. See the link below.

 https://portal.hud.gov/hudportal/documents/huddoc?...

Hope that clarifies for you

Stephanie