Real Estate Agent · Boise, ID · Member since 2017 · 578 posts · 379 votes
Being an investor myself makes it a lot easier to navigate the more complex transactions. This one was a good example, it was tenant occupied, but we were able to have one unit vacated before closing so my client could qualify for an owner-occupied FHA loan. It took a longer closing period, but it paid off.
My clients just closed on a duplex using the FHA house hack strategy, and it's a great example for anyone looking to get started.
The plan:
• Live in one unit, rent out the other
• Current rent from the occupied unit: $1,495/month
• After factoring that in, total cost of ownership drops to about $1,800/month
Why it works: FHA allows low down payments if you occupy one unit. The rent from the other side helps offset the mortgage, and over time, the owner builds equity while someone else helps pay it down.
This is still one of my favorite entry points for new investors, you can start building wealth without needing six figures in cash.
I'm curious, for those of you who have house hacked before, what challenges did you run into with tenant-occupied properties or FHA requirements? And for anyone newer to investing, would this kind of setup work in your market?
You’re spot on with most of that — here’s how it breaks down:
FHA and 20% down:
Even if you put 20% down on an FHA loan, it still requires mortgage insurance (MIP) there's no way around it on the FHA side. That's one of the big differences compared to a conventional loan, where 20% down eliminates PMI.
When MIP falls off:
For FHA loans made after June 3, 2013, the MIP rules depend on how much you put down:
Less than 10% down: MIP stays for the life of the loan.
10% or more down: MIP lasts 11 years, then it drops off automatically.
How to remove it sooner:
Yep, to get rid of MIP earlier, you'd have to refinance into a conventional loan once you've built up at least 20% equity and meet the other lending criteria.
A lot of first-time buyers go FHA just to get in the game, then refinance into conventional once their value or equity grows enough to make it worth it.