Fastest Route to house hacking

House Hacking
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Fastest Route to house hacking

Jack Darby
Member since 2026 · 13 posts · 11 votes

Pros! I am starting my investing journey. My top priority is to do wholesaling. Though, for my personal, I looking to house hack in the near future, probably towards the end of the year around September or so. What do you all believe to be the best way to take care of this ? My plan was to utilize the FHA loan. Drop some knowledge on me! Thanks in advance!

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Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
5mo

Regarding FHA versus conventional, I disagree with Jeff that it looks bad with a Seller. That just means that your agent doesn't know how to present it. It's all about presentation. If someone has concerns over an FHA loan, then your Realtor can just explain that it is actually EASIER to get the loan approved because they have looser guidelines. It many ways it is actually safer to go with FHA than any other loan.

With that said, there are some major advantages of putting 5% down including removing PMI later on, etc. But it all comes down to your cash reserves.

The name of the game with house hacking is the more bedrooms and/or units, the better. Depending on how much cash and time you have, look at properties with dysfunctional floor plans to maximize more bedrooms and get a better price from the get-go.

Also don't be afraid to get uncomfortable. On my second house hack, my wife and I lived in the studio ADU (360 sq. ft.) and rented out the main house for two years before moving. It helped us get out of debt, refinance twice, and put us on a much better path going forward.

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  • Jeff SchemmelBusiness Member
    Real Estate Agent · Saint Paul, MN · Member since 2014 · 384 posts · 401 votes
    6mo

    I highly recommend discussing the 5% down conventional options with your lender as an owner-occupant. This loan option should allow you to apply your leverage more effectively in a negotiation when you do have leverage. With an FHA loan, things get very, very tight and less "confident" from the seller's perspective because you have extra hoops to get through in appraisal, more time from offer to close, and more escape routes that leave the seller vulnerable. In general, passing FHA's self-sufficiency rule on 3&4 units is a tremendous feat; almost certainly not plausible. With 1.5% more down, you can approach a negotiation with more confidence, take less time, and skip over the hoops in appraisal. A seller is MUCH more likely to work with the latter, and you have far less to worry about killing your deal.

    Additionally, with an FHA loan, PMI is permanent; with, I believe, certain exceptions for higher down payments. With conventional, you can drop PMI once you and your lender work out that your equity is high enough.

    Try to line up a closing with the first weekday of the month, and make sure you're collecting pro-rated rents & security deposits in your purchase agreement for any existing tenants so you collect rent for the first two months and maximize the deferral of your first mortgage payment.

    Understand your local market's seasonality, and play it right.  Buy when the peak market is waning, while you still have options but you are more likely to have leverage when fewer buyers are out.  Seek out seller credits to pay your closing costs before price reductions so you can use your cash as reserve, or for sensible upgrades.

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  • Jack Darby
    OP
    Member since 2026 · 13 posts · 11 votes
    6mo

    Thank you jeff! That helps out a lot ! I have just recently found out that there is an option to put 5 percent down on a conventional! I was under the impression that the fha is the only option for having a low down payment. That gives me more confidence already. I will look into this some more ! I appreciate your post !

    1Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    6mo

    @Jack Darby

    If house hacking is your plan and you want to use the FHA, go ahead and get pre-approved now so you will be ready to go by September. I think you should continue doing some wholesaling if you'd like in between, but focus on finding a good 2-4 unit or SFH for RI that will rent enough for most of your payment. I suggest an easy deal with solid numbers should do the trick and leave you plenty of room to grow.

    Good luck!

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  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    6mo

    I'd recommend the 5% down loan program. I'd look to connect with a lender or two to get preapproved. Then, connect with a local realtor. I would also be actively going to meetups to network with other investors. 

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  • Kyle HendricksPro Member
    Lender · Member since 2021 · 170 posts · 74 votes
    5mo
    Quote from @Jack Darby:

    Pros! I am starting my investing journey. My top priority is to do wholesaling. Though, for my personal, I looking to house hack in the near future, probably towards the end of the year around September or so. What do you all believe to be the best way to take care of this ? My plan was to utilize the FHA loan. Drop some knowledge on me! Thanks in advance!

     @Jack Darby Love it man! Lender here and I agree Househacking is the absolute best way to get started in my opinion. I have done this myself and help tons of buyers do the same all around the country. Conventional 5% and FHA 3.5% can both be great ways to do it. It will come down to credit, debt to income, cash to close etc.

    I typically run both for all first time buyers and go through both with them to see what makes the most sense. 

    We also have a 0% down FHA househack option on up to 2 unit properties that utilizes down payment assistance. Let me know if you have any questions and happy to help!

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  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    5mo

    Regarding FHA versus conventional, I disagree with Jeff that it looks bad with a Seller. That just means that your agent doesn't know how to present it. It's all about presentation. If someone has concerns over an FHA loan, then your Realtor can just explain that it is actually EASIER to get the loan approved because they have looser guidelines. It many ways it is actually safer to go with FHA than any other loan.

    With that said, there are some major advantages of putting 5% down including removing PMI later on, etc. But it all comes down to your cash reserves.

    The name of the game with house hacking is the more bedrooms and/or units, the better. Depending on how much cash and time you have, look at properties with dysfunctional floor plans to maximize more bedrooms and get a better price from the get-go.

    Also don't be afraid to get uncomfortable. On my second house hack, my wife and I lived in the studio ADU (360 sq. ft.) and rented out the main house for two years before moving. It helped us get out of debt, refinance twice, and put us on a much better path going forward.

    2Reply
  • Adam TafelBusiness Member
    Real Estate Agent · St. Paul, MN · Member since 2017 · 591 posts · 400 votes
    5mo

    The best way to get into wholesaling is to join a team of local wholesalers. There are all sorts of charlatans (spelling?) online, do not buy the course! You need real, local advice from someone you can actually witness having success. Personally I believe that getting your real estate license and selling a few homes every year is the path of least resistance with less ethical concerns (you're not stripping equity from granny by listing her home on the MLS) , I also know plenty of ethical local wholesalers, so it can be done, but the successful ones have massive marketing budgets and teams.

    Househacking : FHA is a good way to go if your DTI requires it, but there are no longer income restrictions on the 5% down conventional products, so I would start there to see if you qualify. Remember that qualification for 2-4 unit purchases is a spectrum, as you can use 75% of the actual or projected rents against your personal DTI.

    I have worked with 100s of house hackers over the years, and the best advice I can give is to buy a quality building in a quality location, whatever that might mean to you. Most of the issues newer investors face are related to suprise capital expenses, bad tenants, water intrusion, and/or never-ending repairs. Buy a property which has been taken care of with newer roof, mechanicals, and clean sewer line, in an area which will attract good tenants.

    Too many new house hackers focus on “spreadsheet deals” as I call them, looking for the highest cashflow margins possible, and while this can work for many investors, these deals tend to cashflow better because they are less desirable.

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  • Kyle Spearin
    Real Estate Agent · Boston, MA · Member since 2016 · 450 posts · 214 votes
    5mo

    @Jack Darby I'd evaluate FHA and low down conventional loans with lenders recommended by friends/family/existing relationships. FHA isn't always better because you carry PMI, so be sure to look at this from different angles with your lender.

    While you're gearing up to make your purchase, keep stacking money, get a feel for what your pre-approval amount would be, and learn the market you plan on investing in!

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  • Amit PatelBusiness Member
    Property Manager · Bartlett, IL · Member since 2025 · 158 posts · 65 votes
    5mo

    Hey Jack! Smart move starting with wholesaling for some quick cash while lining up your house hack around September, that’s a great combo for beginners.

    Best way to handle it: Stick with your FHA plan if your credit and DTI need the flexibility — 3.5% down on a 2-4 unit is still one of the easiest ways in. Get pre-approved right now so you’re ready to jump when the right property hits in the fall.

    You can keep wholesaling in the meantime to build market knowledge and some extra capital. Just don’t let it distract you from scouting solid 2-4 unit deals (or even a single-family with a basement apartment) where the rental income from the other units covers most of your payment.

    A couple quick tips from managing hundreds of these in the Chicago suburbs:

    -Focus on quality location + quality building (newer roof, mechanicals, clean sewer line) — avoids the expensive surprises.

    -More bedrooms/units = better cash flow and easier to rent.

    -Lenders will now count 75% of the projected rents toward your qualification.

    You've got a solid plan. If you want real talk on FHA vs. the new 5% conventional options, or help spotting what's actually working in the burbs right now, just shoot me a message — happy to drop more specifics.

    You got this! And good luck in this journey!

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