Morgantown, WV · Member since 2020 · 23 posts · 5 votes
Hello! I am looking for some advice. What are the positives and negatives for a FHA loan? Since I don't have much in cash ($600) I want to use that loan to buy a property. Particularly, an apartment. Any advice? I am new to all of this.
I was just about to ask if this is true re FHA loans as I had a lender say something along those lines today but more like FHA borrowers with credit scores below 650 are ineligible at this time. First it was that they would have to pay more points to secure a rate now they are ineligible..
What's the real deal? @Chris Mason, maybe u can shed some light on this for us?
Long story short, the mortgage industry is imploding. Higher risk loans are evaporating by the week. Non-QM is done, lots of places are cutting off cash out refinances, bye bye to reno loans, HML are getting conservative, bla bla bla. FHA is on the chopping block.
Markets are on pause until they get a sense for how many people will not be making their April 1st rent/mortgage payment. It'll take some time to process that data.
SFR owner occ good credit is still open for business without any panicking going on.
Does anyone have any experience working with Rental Property Lending Group of America? I am interested in buying a townhome. Any suggestions with private money? Alternatives besides FHA?
@Willie Bradley depending on your market, an FHA loan may be your best option due to the low DP requirement. If you find a duplex or a triplex, you can reside in one of the units and rent out the other unit(s). The lender will also use a percentage of the potential rental income from the other unit(s) to help you qualify for the loan (I believe 75%). Yes, you will need to pay monthly MIP, but if the property allows you to live rent free and still cash flows it could be a viable option.
@Willie Bradley depending on your market, an FHA loan may be your best option due to the low DP requirement. If you find a duplex or a triplex, you can reside in one of the units and rent out the other unit(s). The lender will also use a percentage of the potential rental income from the other unit(s) to help you qualify for the loan (I believe 75%). Yes, you will need to pay monthly MIP, but if the property allows you to live rent free and still cash flows it could be a viable option.
I used the same technique here in NYC.
I am definitely reaching out to apply for an FHA loan this week. I am targeting 3-4 bedroom House, Condo, or Townhomes.
It sounds like now may not be the optimal time for you to purchase, but I would keep an eye on the market, on the unit types you're interested in in the meantime and prepare yourself over the next year or so to be able to jump on a deal that makes sense. Keep coming here, searching for any questions you have to see if they've been answered before and start working with your local lenders (I wouldn't work with big national lenders on investment deals if you can avoid it). Keep plugging away and building up your starting capital; even if the $600 is a typo and you meant $6000, you're still cutting it pretty close depending on the type of units you get and the loan + need for reserves.
You got this! Just maybe now isn't the best time so prepare now to be ready to tackle the perfect deal when it pops up.