I am 20 years old and have saved roughly $50k cash to start investing. I'm looking at Worcester in Boston, Mass. Would anyone advise using the FHA loan for my first property? Obviously, I'd have to live in one of the units, which I am totally open to. I would love any advice or guidance anyone has!
Hi @Edward Mahoney Welcome to BP and the world of Real Estate Investing! Congratulations on getting yourself to the point where you know you want to invest in Real Estate - and also with a good amount of cash on hand for someone only 20 years old.
Depending on your credit and job history, you could qualify for other type of loan programs, too. The FHA is what I used on my first purchase, though and certainly not anything wrong with it. I'd be happy to make a connection to a local lender who can help you with your financing options.
Best of luck and please don't be afraid to ask any question you have!
@Edward Mahoney You're correct that FHA is owner occupied and as memory serves me, it's supposed to be at least 12 months unless there's some verifiable reason like a job transfer.
Don't fake the owner occupancy bit. That's mortgage fraud and it's a felony.
FHA is a good way to go, but be prepared for their appraisal process. They want homes to be move-in ready. They will fail a home for peeling paint, wobbly handrails, cracked glass, crumbly cement steps and that sort of thing. Major systems like HVAC and septic must be in working order.
If any of those items cause an appraisal to fail, you can consider an FHA 203K (construction) loan. These add some friction and expense, but lots of people use them to do rehabs of owner occupied properties.
Talk with a local lender about Mass Housing too. They have some pretty good grants right now. One of them is up to $11,000 in down payment and closing costs assistance. You'll have to attend a workshop, but that seems like a fair trade, right? Mass Housing's appraisal process is a lot easier too.
If you can stay south of the Mass Pike and out of the Worcester hills, you'll have less snow in the winter. Fairly often, the South Shore and South Coast get rain or a rain/snow mix while the Worcester hills get clobbered due to having about 1,000 feet in elevation.