0% Down, Owner Occupied...Yes or No?

[Aaron Hunt]

Will be moving soon to a (annoyingly) HOCL area for career and to be closer to family.

Based on career/projected income, was offered a 0% down, no PMI, owner-occupied option (Rate is ~4.8%) from a bank we have a relationship with. Extends well into the high 6 figure range.

No intention of maxing this out, still focused on investment portfolio growth. 

We are looking at living “small” relative to the area, and our income.  Budgeting 10%-12% of our gross household income towards mortgage (or rent...). We will be settling in this area long-term, potentially forever.

Our first world problem gives us the following options:

1. Rent. Invest elsewhere where the numbers make sense. Aim to buy “forever home” later on down the road, maybe at next correction.

2. Buy a turnkey condo/home now with the 0% down program to take advantage of owner occupied financing. Convert to rental or sell. Advantage: It’s just barely over what we’d pay for a rental. Disadvantage: If it becomes a rental it will not be cash-flowing, offsetting the no down payment. (Glass half full: I can and would take the down payment and invest elsewhere...)

3. Rent (short term). Buy something more beat up (read:older) with owner-occupied financing, rehab and force appreciation. (Easier said than done, but willing to go at it.)

Question boils down to: 

Should we continue to take advantage of no/low-down owner occupied program everytime we move?

Or is cash flow so important that it negates any advantage of low-down programs in this type of hot market where house values are smoking rental market? They don’t seem to be catching up...