FHA House Hack

[Sam Evrard]

Let's say I'm looking to go in at 3.5% on a duplex in the Columbus area using an FHA. I've been seeing properties go for 250k-350k that are within a reasonable range for an investment. What amount of cash saved is feasible for this option?

[Albert Bui]

Quote from @Sam Evrard:

Let's say I'm looking to go in at 3.5% on a duplex in the Columbus area using an FHA. I've been seeing properties go for 250k-350k that are within a reasonable range for an investment. What amount of cash saved is feasible for this option?

 well its 250-350 X .035 (3.5% down payment in decimal format) = 8750-12,250 down payment + closing costs (probably 6-8k roughly).

If you go even leaner you get a DPA (down payment assistance) program and that absorbs/covers/offsets your 3.5% down payment then you bring in the remainder of the down payment or just the closing costs.

If you go even leaner, you get the seller to cover your closing costs and then some becuase FHA is a program where you can receive up to a maximum seller concession of 6% so 6% or 350,000 is well over 20G's of closing (potential, your market may vary). In this scenario you'd bring in no money to the deal other than your documented income, credit, and promise to hereby pay on time.

Some DPA programs are only allowed on 1-2 units so if you're house hacking a fourplex you might have to go with the standard FHA or 203k (if you're in need of cosmetic repairs 203k streamline or the overhaul of rehabs with a standard 203k FHA program).

We've never experienced a lender we work with that required cash reserves on a FHA loan other than in specific circumstances like with a fourplex (min 3 months) or if you're under 600 fico some lenders add on an overlay which requires some reserves but overall in 95% of FHA situations there are no cash reserves required that I've seen over the last 15 years.

I've personally house hacked over 4 properties (condo, townhome, 2 fourplexes) and the xperience you're gain from them and managing your own tenants will definitely help ease you into rental game. Im looking into tenantcloud software at the moment as it seems like the most functional platform to manage tenants A-Z at free/low cost.

Good Luck on the RE game.