House Hacking Question

4 Replies

Hi yall, I am a college student studying civil engineering, I have a job lined up for after school but I still have one more year of school after this year. I am thinking why not but a 4 bedroom house and live in it next year and get a 3.5% FHA loan. In the house market where I go to school (Buffalo NY) homes are posted for 100-140k, if I can find a good deal and say get a 125k house for 100k then I would pay 3.5k down + 3k closing costs. I would then be able to rent out the other 3 rooms right? I know you can do this with multi families but not sure if I can still rent out rooms in a single family with a FHA loan? *NOT SURE WHY IT WENT TO ALL CAPS BUT I CANT STOP IT* LOOKING TO THE FUTURE AFTER THE YEAR OF ME LIVING IN THE HOUSE FOR THE YEAR WHAT SHOULD I DO WHEN I MOVE BACK HOME AFTER GRADUATION AND NEED TO GET OUT OF THE FHA LOAN? IF I CAN ”FORCE APPRECIATION” WOULD I GET A STANDARD LOAN TO PAY OFF THE FHA LOAN AND THEN I CAN RENT OUT THE 4 ROOMS? THANK YOU

You can rent rooms in a single family home, has nothing to do with your mortgage. 

After you graduate you can refinance into a conventional loan, rent all four rooms, or sell it. If you refi out of FHA, it allows you to use the low down payment option again for another purchase.

If there is a college student market there, you can generally make more than normal leases by renting rooms individually. If you could regularly rent the house for 1200 a month to a family, you can rent the same house for 2k a month ($500/room) to 4 college students. 

There is nothing technically wrong with your plan. The two hurdles you will have to jump through is income for one. Do you have the income to get approved for a mortgage (doubtful they will include rental income)? Second, FHA loans are harder mortgage products to use. They require the home pass inspections and are usually considered to be less favorable to the seller. I've heard of sellers taking less for a home to avoid a buyer using FHA. Buying a house under market value is usually done because it has deferred maintenance or the seller needs quick cash. Neither situation is conducive to FHA mortgage. If you are able to jump these hurdles, your plan is solid, but I encourage you to spend time here learning and reading. You will need to combine the knowledge you learn here with your knowledge of your local market, and likely that of a mortgage broker and real estate agent in order to determine your best plan of action.

You can call a mortgage broker and find out how much you may get pre-approved for. You can also reach out to an agent and run your plan by them to see if its reasonable to get a $150k 4bedroom house using FHA.