4 Plex with FHA Financing

4 Replies

I am looking to get into a multi-family house hack next year and originally I was looking at duplexes. I have now turned my attention to 4-plexes. I am in the south Texas area. I want to try to get in with as a little down as possible using the 3.5%. I know this comes with PMI and MIP so monthly will be higher than without, but lowers the barrier to entry significantly.

Does anyone have any info on what other barriers there might be to entry? I am looking at new construction, going to live there for a year and then change to a conventional and do it again. I know it would be better to get one and build equity into it, but I'm not ready to go that far on the house hack.

What are current interest rates? Trying to get some info early so when the times comes I'm ready to go.

If it's new construction, obviously there won't be tenants so I would not be able to use the 75% of monthly expected rent? or would this still be applicable based on what I'm expecting to charge?

Anyone with duplex, triplex, quadplex I would love to hear from you.


You have a great plan and the right idea going for a 4-unit, my first house hack was a duplex and I wish I would've went with the quad! However you won't be able to simply change the loan to conventional after a year, you would essentially be turning this into a conventional investment loan since you won't plan on living there anymore, meaning you would've needed to build up to 20% equity in the property. I'm not sure with it being new construction if they will allow you to use rental income, I would definitely reach out to a lender about this. Local credit unions can be a little more flexible if you build relationships with them. Good luck!

Originally posted by @Tyler Lynn :

You have a great plan and the right idea going for a 4-unit, my first house hack was a duplex and I wish I would've went with the quad! However you won't be able to simply change the loan to conventional after a year, you would essentially be turning this into a conventional investment loan since you won't plan on living there anymore, meaning you would've needed to build up to 20% equity in the property. I'm not sure with it being new construction if they will allow you to use rental income, I would definitely reach out to a lender about this. Local credit unions can be a little more flexible if you build relationships with them. Good luck!

So in order to get out of the FHA, I would either have to have 20% equity and do a investment mortgage or refinance into a conventional mortgage where I would need to live another year, and after that I would satisfy the 1 year of still owner occupied at which time I could use the FHA again for another property?

 

Yeah, FHA will only allow you to have one loan at a time, the only ways around this is to refinance, or they have certain clauses like if you move for work reasons you can get another. If you don't capture the 20% equity though it would be easier to just start with the conventional owner occupant loans on the next one.