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Private Lending & Conventional Mortgage Advice

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Natali Cobb
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FHA loans on owner occupied multifamily properties

Natali Cobb
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  • New to Real Estate
  • Clifton Park, NY
Posted Mar 19 2024, 19:25

Hi all,

Can I use a FHA loan on a small multifamily (2-4 units), as long as I live in one of the units for at least 12 months? Are there any other major stipulations to consider? Any tips to get qualified for this type of loan?

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Clint Jusino
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Clint Jusino
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Replied Mar 19 2024, 20:07
Quote from @Natali Cobb:

Hi all,

Can I use a FHA loan on a small multifamily (2-4 units), as long as I live in one of the units for at least 12 months? Are there any other major stipulations to consider? Any tips to get qualified for this type of loan?

I believe there are income requirements and this has to be your primary residence. 3.5% down is the minimum. There will be PMI applied to your loan. I recommend when you are available to, try to refinance into a conventional to get rid of the PMI. There's a credit score range as well. You need to be 580 or higher. If lower then you'll need 10% down payment. Best of luck!

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Derek Brickley
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Derek Brickley
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Replied Mar 20 2024, 06:13

Hey Natali!

Yes you can use either FHA or Conventional for 3.5% or 5% down respectively. FHA 3-4 units has a self-sufficiency test which can be difficult to pass in higher priced markets where the rent from the other units needs to be greater than or equal to your total housing payment. Benefit to the conventional option is that this does not apply. Hard to say right off the bat which is a better option since it depends a lot on what you are looking for and your situation but speaking with a lender that understands the application of primary residence loans in multifamily will be important to help you find the right option.

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Natali Cobb
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Natali Cobb
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  • New to Real Estate
  • Clifton Park, NY
Replied Mar 20 2024, 06:36
Quote from @Clint Jusino:
Quote from @Natali Cobb:

Hi all,

Can I use a FHA loan on a small multifamily (2-4 units), as long as I live in one of the units for at least 12 months? Are there any other major stipulations to consider? Any tips to get qualified for this type of loan?

I believe there are income requirements and this has to be your primary residence. 3.5% down is the minimum. There will be PMI applied to your loan. I recommend when you are available to, try to refinance into a conventional to get rid of the PMI. There's a credit score range as well. You need to be 580 or higher. If lower then you'll need 10% down payment. Best of luck!

 Great information, thank you!

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Natali Cobb
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Natali Cobb
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Replied Mar 20 2024, 06:38

@Derek Brickley

That's super helpful, I'm going to do some more research into the self-sufficiency tests in relation to my market. I've not heard of many conventional loans for 5% down, are these hard to obtain? Thanks!

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Derek Brickley
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Derek Brickley
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Replied Mar 20 2024, 07:33

Nope!  It's a newer program, just announced back in December.  I purchased a 2-unit househack with the 5% conventional as soon as it came out.

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Jacob Sherman
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Jacob Sherman
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Replied Mar 20 2024, 19:55

Yup standard house hack strategy. Just won't be able to get another FHA on your next one . I wouldn't go FHA though . Conventional allows 5% down on multi now

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Natali Cobb
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Natali Cobb
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Replied Mar 21 2024, 09:05

@Derek Brickley 

That's so interesting! I'll definitely have to do some research on it. Are there any stipulations that come along with it? For example, the PMI on FHA loan. Curious how banks are able to make this work.

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Natali Cobb
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Natali Cobb
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Replied Mar 21 2024, 09:07

@Jacob Sherman

You can't get another FHA loan ever, or just until/if you refinance into a conventional? Why do you recommend conventional 5% over FHA? Just because of the PMI or is there more to consider? Thanks for the input!

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Derek Brickley
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Derek Brickley
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Replied Mar 21 2024, 09:19
Quote from @Natali Cobb:

@Derek Brickley 

That's so interesting! I'll definitely have to do some research on it. Are there any stipulations that come along with it? For example, the PMI on FHA loan. Curious how banks are able to make this work.


Depending on your situation, PMI may be higher and you may have a slightly higher rate. One thing we have noted as troublesome for some potential househackers with this conventional program is that in order to use rental income from the other units towards qualifying you need to have some current housing expense verified (rent, a mortgage, etc.) Without that, you would need to qualify on your income by itself.

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Jacob Sherman
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Jacob Sherman
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Replied Mar 21 2024, 10:25
Quote from @Natali Cobb:

@Jacob Sherman

You can't get another FHA loan ever, or just until/if you refinance into a conventional? Why do you recommend conventional 5% over FHA? Just because of the PMI or is there more to consider? Thanks for the input!


Can get another FHA loan as long as the existing one is refinanced into a conventional . FHA has a standard 1.75% funding fee and permanent mortgage insurance. Conventional does not