Can you house hack with only one owner living there?

Question

New York City, Brooklyn

House Hack Hacking

I’m an investor and my friend is looking to buy a house. But he doesn’t have the down payment. And I don’t have enough for 20/25% down in NYC.

I’m wondering if he could buy a 3 family (triplex), and for him to house hack it with the FHA 3.5%. I would give him the down payment for ownership of 50% of the house. He and the other tenants would cover the PITI. The mortgage would be in his name. Is it possible to have 2 people on the deed, one which doesn’t live there when doing a FHA? Or is this more of a first lien type of loan?

Wayne Brooks · Answer

@Ashley Kehr Just so you know, if you got the loan after 2015ish the MIP is for the life the loa.  You can’t get rid of it by paying the loan down, you have to refi into a conventional or other loan.

Ashley Kehr · Answer

HI Adam. I did this with my sister and it worked very well for us. We purchased a duplex with an fha loan. I gifted her the 3.5% down and she is on the mortgage. We are 50/50 on the deed. She won't owe me the down payment back but when the house sells we will split the profit. Right now she pays $45 to her mortgage while the tenants pay the rest. When we rent out both units and she moves out we will use the cashflow to pay down mortgage to rid of pmi then split the cashflow. Make sure you can trust your friend. Even though you are not on the mortgage if he defaults you'll lose the house too and never see your deposit money.

Ashley Kehr · Answer

Thanks @Wayne Brooks that's really interesting to know! We are far off from doing that but I guess it will be a refi. We did the loan in 2018.

Abel Curiel · Answer

Hey Adam,

Great question. If your partner is living on the property and will be on the mortgage, this should work out fine.

In order for the bank to finance this, they may need a 'gift letter' to show where the down payment funds are coming from.

I'd be happy to look into your situation in more detail and provide a gift letter template when the time comes.

Best of luck to you moving forward!

Abel

Wayne Brooks · Answer

1) the down has be sourced in the borrower’s name, if it is not a gift

2) a gift from a “partner” is not allowed, just family

3) if you become a co borrower, he can’t get the 3.5% down, I think it’s like 15-20%

Frank Procopio · Answer

FHA lender will want to see where the down payment came from

Can you house hack with only one owner living there?

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