First Multi Family Purchase

[Darien Terrell]

Hi All,

I am looking to purchase my first multi-family property to owner occupy in the Akron/Canton area. My plan is to househack for a year and then transfer the property to an LLC after 12 months. I'm looking to put a downpayment of 3% - 5%. For this specific scenario, would you suggest an FHA or a conventional loan and why?

Cheers

[Erik W.]

FHA is one of the most expensive loan products out there with a low down payment, next to VA. Hard money is worse, and requires a much lower LTV.

Keep that in mind, because you will end up paying more in points and processing fees (underwriting, origination, etc), and that affects the overall profitability of the deal. Also, I believe that with FHA and less than 20% down you will also be paying upfront Mortgage Insurance Premium (MPI...instead of PMI). However, as a primary residence, it can be a 'WIN' as you get a low, fixed rate that is locked in for a long time. If the numbers work....

Conventional loan will require more out of pocket for down payment, but that money goes straight into equity so you don't really lose it; it'll be recapture if/when you sell the property.  Fees tend to be less also.