conventional vs fha in CT for multi family

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conventional vs fha in CT for multi family

Reece Randall
Member since 2020 · 5 posts · 3 votes

Hey fellow Investors!

I'm back again, a little more educated and still learning ! Another question or stumble I come across, any advice appreciated. So once again I'm looking to invest into a owner occupied property in the New Haven county area. I have found a house in Meriden, CT. 

The house is roughly 250,000 for a just about turn key 2 family unit. I currently rent and have about $22,000 saved up, credit is 800, no debt other than a car note. I got a prequalification letter to start my process, however I ran into a problem. 

I'm not trying to use FHA only because the PMI with the lifetime of the loan, so I was hoping to go the Conventional route with 5 % down.

However!!! I was told today that with Freddie Mac/ Fannie Mae on a multi family unit I need at least 15% down and 6 months of reserves. 

Just looking for advice anything appreciated! If I was incorrect on any of this, like I said I'm still learning !

THANKS GUYS!

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Lender · Fairfield, CT · Member since 2018 · 183 posts · 82 votes
5y

Hi @Reece Randall

Starting this year, the 5% down conventional option for a 2-unit is no longer available through Home Possible.

My recommendation is to purchase the home with an FHA loan with 3.5% down and then refinance once you have enough equity to a conventional loan. This will allow you to keep more $ in your pocket. You also won't have to wait to save up the 15% for a conventional loan. Please let me know if you have any questions!

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  • Reece Randall
    OP
    Member since 2020 · 5 posts · 3 votes
    5y

    also is it true with a FHA if I put down 10% down instead of the 3.5% the MIP will only be for 11 years?

    0Reply
  • Thomas Stufano
    NY · Member since 2020 · 2 posts · 0 votes
    5y

    @Reece Randall Hi Reece, I believe with FHA the PMI is for the life of the loan regardless, but I'm not a loan officer so I can't say for sure.

    0Reply
  • Reece Randall
    OP
    Member since 2020 · 5 posts · 3 votes
    5y

    @Thomas Stufano I was under the same impression but just came across something that said that figured id ask the pros!

    0Reply
  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    Hey @Reece Randall, 
    I'm not a licensed lender, but I've got enough experience that I should be able to answer your questions. 

    1. FHA Loans have MIP, not PMI. MIP is specific to FHA loans, and is typically more expensive than PMI.

    2. MIP stays on for the life of the loan. The only way to get out of MIP is by refinancing into a non-fha mortgage. PMI on the other hand drops off once you hit 20% equity in the property.

    3. You can purchase a owner occupant duplex with a conventional 15% down, yes. Pre covid I think it was lower. I believe that's currently the minimum. Non owner occupied is 20% or 25%, usually. 

    Always great seeing a fellow Connecticut member on the forums. Hope you stick around!

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  • Account Closed
    Lender · Fairfield, CT · Member since 2018 · 183 posts · 82 votes
    5y

    Hi @Reece Randall

    Starting this year, the 5% down conventional option for a 2-unit is no longer available through Home Possible.

    My recommendation is to purchase the home with an FHA loan with 3.5% down and then refinance once you have enough equity to a conventional loan. This will allow you to keep more $ in your pocket. You also won't have to wait to save up the 15% for a conventional loan. Please let me know if you have any questions!

    3Reply
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