Househack down payment question

7 Replies

Hello all!

I'm currently in the process of moving to Phoenix from Orlando for my new job. I was pleasantly surprised to see the MFH inventory is much better than in Orlando. Found a few I liked and got my agent to start getting more details. But the lender that my agent works with is telling me that since they have additional units beyond my primary residence, any of these will require a higher down payment and the lowest I could get is 10% for a duplex. 

I'm still learning but this seems to go against the whole purpose of house hacking. I'm waiting now to be sent a guide she says that spells it all out. Is this a Phoenix/AZ thing or is this maybe just specific to this lender? Any help is greatly appreciated!

You should be good up to 4 units to put 3.5% down FHA loan.

Thanks @Logan Allec ! That's what I thought based on all I've read here. I'm waiting for the lender to send me stuff so I can see why they're telling me this.

@Yader Gomez I would contact some other lenders in in the Phoenix area it is likely just that lender because you are able to do a FHA with 3.5% down for a MFH up to 4 units so long as its your primary.

Agree with the answers above. You'll be able to find a bank that can do 3.5% fha pretty easily. That specific bank may have additional internal overlays. If there are 3/4 unit properties out there, skip over the duplexes! You can only have one FHA loan at a time so you might as well take advantage while you have the opportunity.

Verify that you aren't dealing with a commercial lender.  Sometimes commercial agents have relationships with commercial lenders (it makes sense).  However, when they do 1-4 units, they forget to switch their brain over from commercial to conventional.

If you have less than 4 RE loans INCLUDING your primary residence (you can own more property than 4 units, but it is the loan count that matters), you should be able to purchase a 1-4 unit through house hacking and pay 3.5% down (FHA) or 5% down conventional.

Make sure you are speaking with a lender that offers FHA and conventional products, not from a commercial standpoint.

I hope that helps!

Thank you all for the help! It seems like there may have been confusion with conventional vs FHA. I had a different lender point that out but even he told me that 3.5% on FHA is only up to 2 units, then it jumps to 15%, which also didn't seem right to me. I talked to my agent about all I've read on here about being able to put 3.5% on up to a four plex and she spoke with my lender again and the boss of the first lender I was working with confirmed what everyone here was saying. Now we're cooking. There's a property with 3 units I'm eyeing so we'll see if everything checks out and I can get an offer in.

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