Best way to finance my first multifamily property.

2 Replies

I currently am looking to invest in my first property by January of next year. I was wondering is an FHA the best way to go as far as financing goes. If so what is the qualifying process.

Originally posted by @Cameron Dirden :
I currently am looking to invest in my first property by January of next year. I was wondering is an FHA the best way to go as far as financing goes. If so what is the qualifying process.

FHA is one route but requires you live in the property for a min of one year as your primary residence.

The down payment are as low as 3.5% down to purchase up to 4 units, however in Houston the maximum loan limit for one unit is 295,550 (SFR,Condo) and can go as high as 568,350 for a 4 unit building in 2014. So hopefully you can find a 4 plex for that price/loan range.

FHA has a lot of mortgage insurance so I would make sure your numbers pencil out and you make your desired return even with vacancy, repairs, mgmt (unless self managing), and capital expense reserves in.

1.75% upfront mortgage insurance is financed - this percentage is based on the base loan amount

+

1.35% annual mortgage insurance premium from FHA (if you put down 5% or more the MI drops to 1.3% annual) this is paid monthly along with your mortgage taxes and insurance.

In terms of what you'll need:

- signed disclosures (authorization forms, etc)

- most recent 1 months pay stubs

- 2 months most recent bank statementes

- 2 years most recent tax returns and W2's

- fill out an online application

Depending on your circumstances you might have more items such as letter of explanations, divorce decree's, mortgage notes, income verifications from your employer or rental verifications from your current landlord, etc

Hope that helps!

Thanks for the information. This may work for me since I do plan to live in one of the units.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.