Have $80,000 in student loan debt. Around $700 monthly debt payments for everything. Making $50,000-$55,000 a year right now. Have $60,000 saved for down payment, closing costs and rehab work for a 2-4 family. Would be my first purchase and I would be looking to live in one of the units. Would I still get approved for a loan? Or should I pay more debt down and wait to invest in a few years? Would love to hear everyone’s advice regarding what to do and what they have experienced.
If you have money saved for a down payment and plan to live in one of the units, look into FHA financing. You can get a FHA loan on up to 4 units. The down payment is typically 3.5%. If your credit score is 580 or less, then you might have to put 10% down. Hope this helps.
@Chad Lawrence welcome to BP! Waiting a few years may have you waiting forever-and you seem disciplined from your post. So I would go for it! Getting approved is often dependent on how many banks you ask. Many different types of lenders out there. All the best!
Chad - You can use an FHA renovation loan to fully fund the rehab of a 2 to 4 unit property if you agree to live there for 12 months before leasing it all to tenants. These loans use the After Renovated Value to approve theloan and even allow you to borrow up to 6 months of mortgage payment money while it is under reconstruction and cant generate cash. Plus there is an automatic 10% emergency reserve added for unexpected costs that may arise during the rehab process to protect you. Not sure where you are but in your market this could be a great loan. Where I live in Chicago I have clients do them regularly even emerging neighborhoods where prices are still lower. My blog has many stories of how it works.
@Chad Lawrence I was in the same boat a couple years ago with far less cash available but similar income/debt. I made it work with an FHA loan occupying 1 of the units. I would go for it, would never go back & tell myself to wait.
I am in the same position as chad like exact same! I have about 60 grand and was looking to get a fha + first time home buyers but I live in New York and was looking to buy a multifamily here but it is so expensive is it still worth is or should I consider a cheaper housing market
@Chad Lawrence - I would pursue it. If for some reason it does not work out, you'll have a clearer idea of what you need to work on and will have made connections for when the right opportunity comes along.
@Suny Capezzuto did you buy a duplex or a 3/4? And if you don’t mind me asking how large of a loan did you get approved for at that time?
@Chad Lawrence i bought a 2 family home & was approved for $130k (my credit score wasnt stellar). i dont mind the questions at all!
@Chad Lawrence , you should have options. Given how low rates are, this not only makes it more attractive to act sooner rather than later, but also provides you more buying power. Sometimes you end up chasing a carrot when waiting a few years to pay down debt....when instead you could catapult forward via a house-hack. Where are you thinking of buying?
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