House Hack multiple Multi families,can banks/underwriter stop it?

14 Replies

Before we buy our 3 unit what is the best loan product which would allow you to house hack multiple MFR's?

Would choosing one loan product over another raise an issue when it came time to Purchase our 2nd MFR? Or our 3rd MFR?

Asking this now, I also hear that under writers may not approve moving from one 3 unit to another? Is it true, and if so, is there a way to get around the under writers if you plan to house hack multiple MFR's?


Any thoughts are appreciated, thank you.

@Antonio Porta I often encourage my clients here in the Chicago market to lead off with the 5% down conventional loan if they can. This frees up the FHA loan for the second purchase. If you already own property, this strategy won't work, but for someone who has never purchased a home this strategy is golden!

@John Warren, thank you for that. So we would bascially save the fha for the 2nd one. 

What loan product would you recommend for the 3rd multi family owner occupy. I know we must live in it for 1 year. Would it be possible to do conventional 5% down for the 3rd  if we went this route for the 1st property? 

Would like to piece together a game plan before we get our first one. Appreciate your thoughts.

Originally posted by @Antonio Porta :

@John Warren, thank you for that. So we would bascially save the fha for the 2nd one. 

What loan product would you recommend for the 3rd multi family owner occupy. I know we must live in it for 1 year. Would it be possible to do conventional 5% down for the 3rd  if we went this route for the 1st property? 

Would like to piece together a game plan before we get our first one. Appreciate your thoughts.

 Property 3-10 should be conventional financing.  5% down is only for owner occupied purchases.  If it's truly for an owner occupied property, then yes.

@Antonio Porta your third move is typically to refinance the FHA loan and go FHA again. It gets harder to go with low down payment loans after 2-3 properties, but it is still possible for a bit. After that, you should be in a better cash position where you can start doing investor loans.

Awesome,thank you for responding. 

My game plan is to go 5 % down conventional for my first and FHA for the second.

My mortgage guy told me the Home Possible product which allows you 5% down is changing its income threshold, from 147k down to 87kish. He explained this is not for all neighborhoods in NJ. Its just those with a higher census track. And he provided a map that we can check where these census areas are, those with low census areas freddie mac is not enforcing the income restriction.

This is not great, as we would not be able to use this product. Has anyone else heard of this? Apparently, it takes place July 29th

Originally posted by @Antonio Porta :

Awesome,thank you for responding. 

My game plan is to go 5 % down conventional for my first and FHA for the second.

My mortgage guy told me the Home Possible product which allows you 5% down is changing its income threshold, from 147k down to 87kish. He explained this is not for all neighborhoods in NJ. Its just those with a higher census track. And he provided a map that we can check where these census areas are, those with low census areas freddie mac is not enforcing the income restriction.

This is not great, as we would not be able to use this product. Has anyone else heard of this? Apparently, it takes place July 29th

 Home Possible has always been Area Median Income (AMI) driven.  The eligibility piece is on Freddie Mac's website.  You click on the link, plug in the address and the income threshold populates.  Here's the link.  Sounds like your guy knows what he's talking about.

Best of luck

Stephanie

http://www.freddiemac.com/homepossible/eligibility...

@ John Warren 

Thanks for the fast reply. 

I thought you can only use FHA once, unless you move 100 miles away or something like this. What do you mean Refinance FHA and do FHA again for the 3rd move?

@Antonio Porta a lot of my clients here in the Berwyn/Forest Park area run into this problem. They used their FHA loan to buy, and then want to continue growing. The solution is to refinance out of the FHA loan into a conventional loan. You need to have equity to pull this off, so you would need to have bought a "good deal" that was either under market value or is in a rapidly appreciating market. Fortunately, in my market we are seeing strong appreciation, so many folks are able to refinance out of their FHA loans.

Once you refi out of the FHA, you can then use it again. Speak to a good investor friendly lender and this should be a fairly simple process.

@john warren I have been planning to buy a duplex to house hack for quite some time, and am at a point in life where I am ready to buy. I want to buy a duplex every year for the next 5 years or so, knowing I have to live in one unit for at least a year using an FHA or HomePossible loan. I became worried when I read this article: FHA-Duplex and it states that you need to have the property on your taxes for 2 years and at least 30% equity in your property in order to get another loan after the first one. Also it mentions the 100-mile rule. Would you be able to shed some light on these things? I don't want to start out with the wrong loan or go into a property thinking I will live there 1 year and then get stuck.

@Steven Young I am not a lender, so I am not well versed enough to shed much light on those questions. I do know that there are a lot of work arounds, and a good lender who is "investor friendly" will know all of them! If you are working with good agent, you most likely will have a good lender referred to you. When I work with clients, it is really a three way conversation between me, the buyer and the lender. I check in with the lender on strategy so that we get it right for each investor. 

If you qualify for VA loans, you can use those for multi-family as part of the mix for acquisitions AND you can use them up to your VA limit (not just one time). So, you could, in theory, do something like this:

  • Multi-Family with Home Possible 5%, a year later...
  • Multi-Family with VA 0% down, a year later...
  • Another Multi-Family with VA 0% down, a year later...
  • Multi-Family with FHA 3.5% down, a year later...
  • 5% Conventional Single Family Home, a year later.. times how ever many you want

I say in theory because it can be tricky sometimes to get an underwriter to go along with all the multi-families. Less challenges with doing single family, but some underwriters may push back.