Conventional vs FHA - DC multi

[Maria Silva]

What are the pros/cons to a 5% Conventional loan vs 3.5% FHA loan on 4-unit complex in DC?

Also, just to note, it's a bit of a rehab property - probably 30k in renovations - but don't wish to do a 203k loan.

Any helpful info or advice would be greatly appreciated!

[Chris Mason]

Originally posted by @Russell Brazil:

Well you cant do a 5% down conventional on a multi, so the benefit with FHA is actually being able to use the loan.

Here's a commercial from Freddie Mac's youtube channel that says you can. I know you aren't a lender, so tell your lender to read up on it, do the extra training to be able to offer it, and set aside 20 minutes with you to go over bullet points. :) 95% LTV conventional won't always work for every property, but it's the best option out there when it can. I'm pretty sure no one else offers it in the Bay Area, so it's not unreasonable to assume that your lender will become the only one offering it in DC/NoVa/MD (that youtube video is a couple years old and only has 1581 views as of this post- this is flying under everyone's radar), which certainly bodes well for you. The commercial linked above talks about income limits, but in most of my market the income limit is literally "no income limit"... it's kind of hard to be over a "no income limit" income limit! I'm guessing it's the same for much of DC and southern Maryland, probably not NoVa from what I remember of the area >15 years ago. 

Preapproval letters the way I do them consist of 3 pages (buyer's agent can use whatever of this they want)...

• Preapproval letter.
• Flier highlighting all the pesky FHA stuff not applicable to it. FHA self sufficiency test, FHA property standards, etc, gone, so you Mr. Listing agent should go ahead throw all the FHA offers in the garbage and tell your client to take this offer.
• Map of census tract of subject property showing the program income limit, especially if it is a "no income limit" census tract.

@Maria Silva, a conventional offer will always be viewed as stronger than FHA. So the advantage is your offer has a far greater chance of being accepted by the seller at all. If a previous FHA offer fell out, the seller will typically be 'done like a cinnamon bun' with FHA and take yours if it is conventional and not insultingly low.

Hi, @Account Closed, how's that property working out? :P