Conventional Loan as a First home buyer?

6 Replies

Hi everyone, 

A brief story of my current situation. 

I graduated a year ago from New York Chiropractic College and I'm currently working as an Associate Chiropractor in Connecticut. As you must imagine, I have roughly $200,000 in student loans...  

So, that being said, I want to start in the real estate investment journey with a multi-family property where my husband and I can live for at least 1-2 year (Eventually we would like to buy at least 2-3 more multi-family properties short term). Now, aside from the fact that I could get more creative with the financing options, I want to explore the loan/mortgage option first. Multiple lenders have told me that because of my financial situation (my student loan) there is no way they can approve me for anything other than the Conventional Loan.

How smart/effective will my investment be if a do it through a Conventional Loan? 

Will I be able to buy another property in short term if I do this option? 

I appreciate any constructive comments, guidance and help. 

Liz

  

Are you currently making payments on your student loans?

It would have to depend on your income and other debt that you carry whether you would qualify for an FHA loan (3.5% down payment on 2-4 units that many people obtain to house hack). If you can qualify for a conventional loan, the Freddie Mac 5% down program for a 2 family home may be something right up your ally to help you get started.

I would be happy to help if you have any questions or need assistance.

I am not making payment for this year. I qualified for the Pay As You Earn repayment plan and that is in a yearly evaluation based of my salary.  

I will appreciate any assistance with contemplating the best option for us in our first investment.  

@Liz Mojica So many investors use their conventional loans before moving to other forms of financing. You're on the right track! You can only do 10 conventional loans and I'd suggest using them all because the terms are better. Make sure only you are on the mortgage, not your spouse as well. Even if you later deed to an LLC where you're both owners, you want to be able to both be able to do 10 conventional loans each.

Oh wow, good to know.  I'm assuming there are qualifications for that however, it's great to know. We are actually going through the process of pre-approval together, but if the case is that it might be more beneficial to do it separate, I will try that route first!!  

Thank you @Alyssa Dyer

@Liz Mojica

Conventional financing is where you are going to see the lowest rates for investment purchases. If you are purchasing a primary multi-family or a multi-family just for investment purchases, I would recommend going with a lender that will count the rental properties income at a 75% rate - which is Fannie Mae's requirement. Some lenders have overlays and won't count rental income for the first 2 years and that can make it difficult to get approved with high DTI's.