First Time Buyer Partner?

Question

Hello BPers! I am a first time home buyer and looking to invest in a house-hack property. I am a young college grad in the DMV (northern Virginia) area and I am willing to purchase a place and rent out the additional bedrooms. I am primarily looking in the Falls Church/Arlington/Alexandria areas, but have also kept my eye on a few places in Fort Washington MD.

My question is if I can partner with a "money" partner to qualify for a larger/higher quality purchase. I am working on getting qualified for an FHA loan but my price range is currently only ~$160k-~180k, which doesn't buy much in this area. Maybe a one or two bedroom condo. Any ideas? Thanks in advance.

Russell Brazil · Answer

@Ryan Rochefort you should reach out to @Upen Patel. He is a lender in the area whose bank I believe does not have any internal overlays to Fannie guidelines. He will be able to give you a solid answer.

Most people in your situation will have their parents as co-borrowers on the loan.

Kevin Romines · Answer

@Ryan Rochefort To answer your specific question, yes you can get a non-occupant co-borrower. If its not a family member then the down payment is larger, as in 25% down versus the 3.5%.

If its a family member, then you can still do 3.5% down payment.

Aaron K. · Answer

@Ryan Rochefort If you both have minimal capital, you might be able to work with that, but at that point I don't believe that you would be able to use FHA financing, because only you would be living in the property.  You might have to use conventional financing (20% down) and organize yourselves into an LLC or S Corp or something similar which will add cost.

Aaron K. · Answer

@Ryan Rochefort I would say it will be extremely difficult to find a money partner for a house hack unless you would be paying rent at market rates as well.  The person with money could just buy the property and rent out all of the units at market rent instead of all of the units minus the one you live in.  You need to think about what value you would bring to the table for a money partner, they will not just give you money for free.

Ryan Rochefort · Answer

Thank you Russell, I'll do just that! I'll share the answer as a reply to this forum post in case anyone else has the same question.

Ryan Rochefort · Answer

Follow up question - what constitutes a ‘family member’ in the non-occupant co-borrower definition? Would a cousin count? He and I are looking to partner in the future.

Ryan Rochefort · Answer

Thank you for the insights gentlemen, you answered my question!

Ryan Rochefort · Answer

I don't think I was clear - this scenario would be mutually beneficial if the partner didn't have much capital to work with. As in we would each pay half of the down payment, combining our resources to buy a better property. Does that make sense?

Ryan Rochefort · Answer

That makes sense, didn't think of it that way. I guess I was thinking that the part ownership in an asset would be the advantage for the money partner, insofar as we would gain equity tin the property as time went on and we could borrow against that.

Ryan Rochefort · Answer

Thanks for the response. It did not answer my initial question of whether or not it would be possible for me to partner with someone to afford a larger budget, but I appreciate the information!

First Time Buyer Partner?

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