Hi - I'm trying to househack in Texas Dallas with the new fannie mae law that was recently passed in Nov 2023. New law offers higher limits on loan amount and more lenient DSCR at a low 5% down.
Does anyone know of a good course to follow? I'm hoping to buy a 4-plex in the next 3 months so I have a place to live. Signed up for Grant Cardone's $297 course, but feel like I need more accountability and also knowledge to pull the trigger. If anyone knows of a good course/coaching on this particular topic, please let me know! Thx.
Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
2y
This isn't a law, its just a change in their criteria. Like if you went to buy a car and they said it was $5k down, and then talked to the manager and he said they'll change it to $3k...the manager here just changed it from 20% to 5% DP that's all. Conventional loans don't do a DSCR, and this changed guideline doesn't have any impact to that portion of the UW.
You don't need a course or a program to use this just get prequalified, and then find a property to put an offer on. With a conventional loan your best bet is really to just buy on market, learn the process via your agent, and gain experience managing tenants. Guaranteed this will give you plenty of new knowledge to leverage into doing RE deals....it's the old get wealthy slow method and works.
No course needed, or have I ever really seen one that specifically teaches what you want to do.
Just a couple of other tricks....I don't think in DFW area you will find a 4plex that you want to live in that will work with DSCR type loan, unless you put down 30-40%. Your rents have to cover the mortgage payment for that. Also not 100% sure, but they also may prohibit you from living in the property.
You'll probably want to do regular conventional loan, but that will also mean tougher qualifications...more income on your side...and you will likely be paying your full share of the rent on your unit. I don't think I've seen any 4 plex in probably 10 years in DFW area that day 1 would generate enough rent from 3 units to pay the full mortgage on a 3.5% or 5% down loan in any area, and if I did, probably not an area you would want to live in or be successful as a 1st time landlord.
If you want to house hack, your best options right now to get as close as you can to covering your mortgage with rents, is to buy a 4-5 bedroom house and rent rooms. If you are really aggressive, rent all the rooms if you can and couch surf, or build you a little room in the laundry room or garage or some alternative space and live there occasionally if you can get your bedroom rented.
Get prequalified today to see what your budget is. Then get a great realtor and start looking at property and making offers. Also realize in DFW area there are very few 4plexes it seems, fewer for sale, fewer that have a vacant unit you can live in, so the opportunities are very very limited. Not impossible, but not at all easy as a podcast will have you believe.
Lender · Phoenix, AZ · Member since 2021 · 451 posts · 287 votes
2y
Hi Kate! You are spot on about the new opportunities offered by the change in guidelines. I'd be happy to go over them with you if you want to DM me. FHA loan limits have increased as of Jan 1, 2024 and you can still put down just 3.5% for 1-4 unit owner occupied purchases. Conventional loan limits have also increased and the big guideline change lies here. Fannie Mae (conventional loans) now allow 5% down payments for owner-occupied 2-4 unit homes. This marks a departure from the previous requirement of 15-25% down payments for 2-4 unit owner occupied purchases.
Lender · Chicago · Member since 2023 · 176 posts · 70 votes
2y
Hi Kate!
You will have to do a 5% (Fannie) Conventional loan as DSCR will require at least 20% down. You won't be able to do FHA for 3-4 units because they will not pass the self sufficiency test. Let me know if you want to see what your comfortable with, that way when looking online your looking in the right range.