House Hacking in N. Side of Chicago. What are financing options?
11 Replies
Jake Kinney
posted about 1 month ago
Hello everyone- long time reader/listener to BP, first time poster. I am looking to house hack somewhere on the north side of Chicago and wanted to get some input from the knowledgeable folks on these forums. Here is a very brief rundown of my situation:
- First time home buyer (FHA?), looking at 2-4 unit multi family
- Focused on North Side (LP, Lakeview, Roscoe Village, Bucktown, Wicker Park, etc.)
- I’ve saved a decent amount for a down payment, have excellent credit, and a relatively higher salary from working for a technology firm
- I’m a single guy in my early 30’s so I have a lot of flexibility for living arrangements
One of my main questions is roughly what % I need for a down payment, and what is the rough debt to income ratio a lender would be looking for? I had a casual conversation with a real estate agent that typically sells condos, and he said for multi family in Chicago, you need 20-25% down and ~6 months of cash in the bank. That seemed quite different than what I had heard on BP, but wanted to ask this group.
Thanks VERY much for your input! I really appreciate it. Hope to learn more from this group.
Jake
Rick Martin
Rental Property Investor from Redondo Beach, CA
replied about 1 month ago
@Jake Kinney , if you qualify for an FHA, it is my understanding you can put down as little as 3% down. Remember, the more leverage you use, the less cash flow you will receive, so sometimes putting a little more down doesn't hurt. Talk to a lender and find out what you can qualify for.
Mark Ainley
Property Manager from Roselle, IL (Chicago Suburb)
replied about 1 month ago
@Jake Kinney I just sent you a DM of our guest last week @Christopher Puleo who spoke all about House Hacking financing. Very informational 45 minutes on house hacking in Chicago specifically.
Brie Schmidt
(Moderator) -
Real Estate Broker from Chicago, IL
replied about 1 month ago
- you can do FHA with 3.5% down but you won't be anywhere near those areas as FHA loan limits are very low. FHA also has a self sufficiency test on 3&4 unit properties which less than 5% of properties actually pass it. Conventional is 15% on a 2 unit and 20% on a 3&4 unit.
FHA Loan Limit | Max Purchase 3.5% | |
2 Flat | $485,800 | $503,420 |
3 Flat | $587,250 | $608,549 |
4 Flat | $729,800 | $756,269 |
Paul De Luca
Real Estate Agent from Berwyn, IL
replied about 1 month ago
@Zack Karp would be an invaluable resource to connect with regarding financing.
Jake Kinney
replied about 1 month ago
Originally posted by @Mark Ainley :@Jake Kinney I just sent you a DM of our guest last week @Christopher Puleo who spoke all about House Hacking financing. Very informational 45 minutes on house hacking in Chicago specifically.
Mark, thanks very much! I listened to the entire episode and found it extremely informative.
Jake Kinney
replied about 1 month ago
Originally posted by @Brie Schmidt :
- you can do FHA with 3.5% down but you won't be anywhere near those areas as FHA loan limits are very low. FHA also has a self sufficiency test on 3&4 unit properties which less than 5% of properties actually pass it. Conventional is 15% on a 2 unit and 20% on a 3&4 unit.
FHA Loan Limit Max Purchase 3.5% 2 Flat $485,800 $503,420 3 Flat $587,250 $608,549 4 Flat $729,800 $756,269
Hi Brie, thank you for the info! I listened to your interview on Straight Up Chicago and really enjoyed it. Would love to talk sometime.
Crystal Smith
Real Estate Broker from Chicago, IL
replied about 1 month ago
Originally posted by @Jake Kinney :Hello everyone- long time reader/listener to BP, first time poster. I am looking to house hack somewhere on the north side of Chicago and wanted to get some input from the knowledgeable folks on these forums. Here is a very brief rundown of my situation:
- First time home buyer (FHA?), looking at 2-4 unit multi family
- Focused on North Side (LP, Lakeview, Roscoe Village, Bucktown, Wicker Park, etc.)
- I’ve saved a decent amount for a down payment, have excellent credit, and a relatively higher salary from working for a technology firm
- I’m a single guy in my early 30’s so I have a lot of flexibility for living arrangements
One of my main questions is roughly what % I need for a down payment, and what is the rough debt to income ratio a lender would be looking for? I had a casual conversation with a real estate agent that typically sells condos, and he said for multi family in Chicago, you need 20-25% down and ~6 months of cash in the bank. That seemed quite different than what I had heard on BP, but wanted to ask this group.
% you need for a downpayment ranges from 3.5% (FHA) to 20% (Conventional)
Debt to Income Ratio- Usually 35 to 38%
6 months cash reserves is what you should have irregardless of what a bank says. It's a CYA number.
Jonathan Klemm
Contractor from Chicago, IL
replied about 1 month ago
@Jake Kinney - You should definitely link up with @Brie Schmidt who commented above. She works in those areas and would more than likely be a really good fit for you. Alternatively, @Sarita Scherpereel would be a good real estate agent for that area.
Also, sounds like you need to speak with a lender who understands investing, connect with @Michael Facchini or @Zack Karp , both of them work with investors and set up straight.
I am not a fortune teller, but I can tell you are definitely on the right path and a property is in your future haha
Reach out if there is any other way we can help you.
Jake Kinney
replied about 1 month ago
Thank you, Jonathan! Appreciate the info and kind words.