Is it possible to use a FHA loan to gain investment properties? I currently do not own any real estate and have been looking to get invested. I've been listening to the podcast for a little now and I know there are many ways in which to obtain real estate, I'm just wondering if this is a strategy and/or option that could be used. Thank you!
FHA loans are intended for the purchase of a primary residence. FHA guidelines require a borrower to establish bona fide occupancy in the home as the borrower's principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.
With that said, there is an opportunity to house-hack (example: purchase a multi-family home with the FHA, live in one unit, and rent out the others). Or, you could purchase the home, live in it for a year to fulfill the residency requirement, and then convert it to a rental.
FHA loans are intended for the purchase of a primary residence. FHA guidelines require a borrower to establish bona fide occupancy in the home as the borrower's principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.
With that said, there is an opportunity to house-hack (example: purchase a multi-family home with the FHA, live in one unit, and rent out the others). Or, you could purchase the home, live in it for a year to fulfill the residency requirement, and then convert it to a rental.
@Joel Allen thank you! I didn't know all of the qualifications for a FHA loan, so thank you for clarifying. With house hacking it might be hard since I have a wife and baby boy, but that could open the possibility for a possible live and flip using a FHA loan.
FHA loans are intended for the purchase of a primary residence. FHA guidelines require a borrower to establish bona fide occupancy in the home as the borrower's principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.
With that said, there is an opportunity to house-hack (example: purchase a multi-family home with the FHA, live in one unit, and rent out the others). Or, you could purchase the home, live in it for a year to fulfill the residency requirement, and then convert it to a rental.
Joel hits it spot on here. House hacking a multi-family is typically what I've come across most often for people looking to take advantage of the 3.5% down FHA loan for investment purposes.
@Caleb another strategy is to buy a new primary home with 3.5% down FHA or 5% down conventional and rent out your existing property. Live in the new home for 1 year, than buy a new primary home and rent that home out. Rinse and repeat. With a family its tough, but some people do it. Just an idea... That way you get primary home rates and reduced downpayment options. You just need to live in the home for 1 yr each time.
The FHA website has some useful limits, obviously you'll want to search for your state and county. But multi family can work for a family if you and your spouse are on the same page with the investment.
I’ve also known people to buy a single family, then air B&B a room for extra income, and because they were in a college town they did pretty well. But again, those are options that could be used.
Is it possible to have a FHA loan and a conventional loan at the same time? I know you can only do FHA loans 1 at a time. But can you have other loans while using a FHA loan?
Is it possible to have a FHA loan and a conventional loan at the same time? I know you can only do FHA loans 1 at a time. But can you have other loans while using a FHA loan?
Yes, you can have a FHA loan and a conventional loan at the same time.
@Caleb Pratt only if you are going to live in the property. You can house hack a duplex and live in one unit and rent the other. That does limit you to where you invest however.
@Joel Allen thank you! I didn't know all of the qualifications for a FHA loan, so thank you for clarifying. With house hacking it might be hard since I have a wife and baby boy, but that could open the possibility for a possible live and flip using a FHA loan.
That's a great alternative. If that's what you are looking to get into you might definitely want to talk with your lender about the possibility of using an FHA 203 K LOAN. These loans are specifically geared to owner occupants looking to buy properties that may need some repairs. That way you can buy the property, fix it, build equity and sell it for profit after at least 12 months.
@Caleb Pratt- no - fha loans arent usable for an investment property purchase ....FHA loans are for primary residence purchases ...you can buy as a primary residence and use a FHA loan and down the road you can always move and rent it out .....you will liekly need a down payment of min 15% of the purchase price for a SFR investment property .....get formally pre approved with a lender so that you become familiar with the numbers and can make sure you can get approved for what you need/ want