Rental Property Investor · Flint, MI · Member since 2019 · 114 posts · 26 votes
I have been watching videos about house hacking for a few weeks now and I learned about “fha” loans due to my research you can get a property with a low down payment but real high mortgage ? So if that’s the case is it better to put 20% to get a lower mortgage or a fha loan with a low down payment? And if I use a fha who would I talk to ? And how much higher would my mortgage be ? Thank you I’m sorry if I come off confusing I just be trying to become more educated so I want make a mistake with my money I appreciate everyone that answer my questions
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
It depends if for example you live in coastal CA and a 20% down payment is at least $100k and you don't have that FHA is the way to go and that is where most house hackers go because they are just starting. 20% is mostly to get rid of PMI and opens up other options on more fixer upper properties when offering, a lot of the lower payment is just because you owe less money due to the large down payment.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
It depends if for example you live in coastal CA and a 20% down payment is at least $100k and you don't have that FHA is the way to go and that is where most house hackers go because they are just starting. 20% is mostly to get rid of PMI and opens up other options on more fixer upper properties when offering, a lot of the lower payment is just because you owe less money due to the large down payment.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
6y
@Montez B. Bigger Pockets actually lets you hover over many abbreviations to get the definition, in this case it is private mortgage insurance and it is usually required when you put less than 20% down, it makes your mortgage payment more expensive.
Rental Property Investor · Woodbury, MN · Member since 2018 · 299 posts · 299 votes
6y
You can usually get an FHA at 3.5% down which will give you a higher mortgage because you will have a higher principle balance on your loan. You will also need to pay PMI until your principle balance falls to less than 80% LTV. However, the main benefit to house hacking is it allows you to start investing with a lower down payment than other loan programs.
One thing real estate allows investors to do is use leverage to increase their own asset balance. An FHA loan allows you to have the highest leverage possible in real estate investing, and as long as the numbers work out, it can be a great first investment.