Murrysville, PA · Member since 2017 · 11 posts · 4 votes
Hi everyone,
I am soon to be a college graduate and will be moving to the Pittsburgh market in early June. My goal by the end of 2018 is to buy a duplex using and live in one unit while renting out the other. Obviously, being a recent college graduate, I won't have the cash available to buy outright, so I will need to finance using either using an FHA loan or private/hard money lending. Traditionally, when I hear about house hacking, I mostly hear about people using FHA loans to fund the deal. Does anyone have experience with house hacking using an FHA loan or any other type of lending? What are the benefits/negatives of each? How do each of the processes differ? What does each lender look at when lending? I'm just trying to gauge what my best plan of attack would be upon graduation to achieve my goal. Any advice is appreciated!
Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
8y
@Devin Arrigo its not a very hard process. On an FHA loan the qualifications are quite borrower friendly. You will need to show proof of income and a credit score of at lease 620. You can purchase a duplex with 3.5% down and the seller can help with up to 6% of the closing costs. Meaning if the duplex is 100k then the seller can pay up to $6,000 of your closing costs.
Specialist · Austin, TX · Member since 2018 · 111 posts · 28 votes
8y
@Devin Arrigo FHA loan is completely different than a HML. Typically a HML is very short lived and costly. In my experience, a HML is typically for fund and flips, because the money borrower is (hopefully) supposed to be paid back within a short amount of time, once you sell the house and profit. I think, personally, that an FHA loan would do you best. On another note, you may also want to consider looking at a lender ;) that has motgage products geared specifically towards real estate investors since essentially that is what you are gearing up to do. You really want to weigh your options carefully. Each program is going to carry their own guidelines for credit, income, employment history, debt-to-income and reserve requirements. It's really a lot to break down.
Real Estate Agent · Pittsburgh, PA · Member since 2014 · 821 posts · 255 votes
8y
@Devin Arrigo Many first time investors like the idea of house hacking for many reasons including the opportunity to see if they are cut out to be a landlord and the potential ability to have their tenant pay most of the mortgage. Going the FHA route is popular with the lower down payment needed, but also consider the occupancy requirement of having to live in the property for one year, and the inspection requirements being more stringent with an FHA loan. If this is still something you want to consider, get expert counseling. Not knowing the full scope of your credit history or student loan debt, I would recommend first talking to a few Lenders to see what you could qualify for. I wish you the best as you start into your REI venture.