Updated almost 5 years ago on . Most recent reply
Loan types in competitive markets (Portland, Oregon or others)
I'm looking to invest in my first house hack in Portland, Oregon, but the market is VERY competitive right now. I'm in the lending phase and trying to decide what to go with. I'm wanting to do a 3.5% FHA or a 5% conventional to leave more of my funds available for additional properties.
If I put an offer on a home with an 3.5% FHA/5% conventional, does it make it a weaker offer and would I be likely to lose out over someone with a 10% or 20% offer?
I realize there are lots of other factors, ways to make your offer better with contingencies, etc, but wanted to get some real life experience thoughts on this.
Most Popular Reply
FHA offers are absolutely weaker than a conventional offer. FHA is more picky about the general condition of the home and if anything comes back as a required appraisal requirement, the seller has to make the repairs. It's usually not a big deal, but in a market with cash and conventional offers it's an extra step that many sellers (and listing agents) try to avoid.
Check with your local lenders to see if there are any conventional 3% down programs in your area. We have a few local lenders in my area that have 3% conventional programs.
Generally sellers are not as concerned about the down payment amount as they are with ability to close and total net. If comparing two conventional offers a 305k offer with 5% down is usually more competitive than a 300k offer with 15% down (assuming similar terms). If you are willing to do appraisal gap coverage and show proof of funds to cover an appraisal shortage, then the actual down payment amount shouldn't matter to most sellers.