First Time Home Buyer

Member since 2026 · 1 post · 0 votes

So I've been wanting to invest in real estate for about 2 years now. I've listened to audio books, podcasts ect. I've decided for my first property I'd like to do a House Hack and buy a small Duplex. And I figure that getting a FHA would be the right move. I've saved up a total of 5k for a down payment and I have about 7k in savings. I want to start right now, but I'm unsure if I still have enough to start investing. Wondering if I should save more? Or if it's safe to pull the tirggger? I really don't want to wait any longer.

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Denver McClurePro Member
Financial Advisor · Dallas, TX · Member since 2018 · 659 posts · 479 votes
6d
Hey Andrew, I'd recommend waiting until you have about 10% of the anticipated purchase price saved up. Yes, you can get in using the 3.5% FHA loan, but you'll still have additional expenses such as closing costs, immediate renovations, and of course, an emergency fund built to cover maintenance and Capex. I recommend chatting with @Debra Morrison about your options.
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Rick Albert
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
6d
I tend to agree, most properties nowadays need some sort of work and if you buy a place completely vacant, you need to account for vacancy until rented.
Thinking creatively, there are two options to explore:
New construction: Lowers your repairs and major systems (capex) and you get started with getting the place rented. Plus some builders are offering decent incentives like covering closing costs or lower interest rates.
Consider FHA 203(k) loan or similar: Buyer a fixer multifamily and finance the construction. If there is room in the budget you can even finance some of the payments. That way when you move in, all of the work has been done. I have used this program before. It's not easy to work with, but it is still a great option.
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Denise SuppleeBusiness Member
Realtor · Willow Grove, PA · Member since 2017 · 962 posts · 636 votes
6d
Hi @Andrew Van Houten, I hear the itch to get moving, I felt it too when I bought my first house hack as a single mom with very little saved. With $5K down and $7K in savings, I would pause just a bit longer. FHA gets you in the door, but closing costs, a maintenance reserve, and the inevitable first repair bill add up fast, and you do not want your first months as a landlord to be a financial scramble.
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Laura ShinklePro Member
Realtor · Charlotte, NC · Member since 2017 · 357 posts · 292 votes
6d
Hey @Andrew Van Houten I get it, and I know saving is tough and it's boring! I do think you need a little bit more cash since that doesn't leave much room for emergencies. What if the HVAC goes out a month after you buy the duplex before you get a tenant in? The more cash you have, the less risky the purchase and the more options you'll have.

One thing you should look into is down payment assistance programs and grant programs in your area. That may solve your cash issue. Caveat is that it usually comes with a slightly worse rate (but if your tenant is paying a good portion of that, the numbers work and it gets you into the door faster, who cares?). Sometimes they also come with a rule that you have to live in the property for a certain number of years, so definitely check that before you commit or get too excited about one particular program.

Good luck!
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Gregory AcsPro Member
Lender · MD · Member since 2025 · 133 posts · 52 votes
6d
I think you're off to a great start, and it's smart that you're asking the question before jumping in. FHA can be a great option for house hacking, but I wouldn't base the decision on the down payment alone. I'd also want to make sure you have enough reserves for closing costs, moving expenses, and unexpected repairs after you buy. Owning a duplex is much less stressful when you have a financial cushion.
I'd recommend talking with a lender now, even if you decide to wait a few more months. That way you'll know exactly where you stand, what you qualify for, and how much more you may need to save, if any. If you'd like to compare your financing options or walk through what buying a duplex with an FHA loan could look like, I'd be happy to help.
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Aaron ZimmermanBusiness Member
Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
5d
What market are you in?
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Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
5d
@Andrew Van Houten
I know you are close, but I wouldn’t jump into a duplex based on having only $7K left in the bank after making the down payment. You need to get pre-approved, figure out what your actual money to close will be, and ensure that you still have some good reserves once you close on the purchase.
Good luck!
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
5d
If I was starting out again with what I know now, I'd look to acquire a 2-4 unit property with an FHA 3.5% low-down payment mortgage.
I'd also look into using an FHA 203k renovation loan, allowing me to buy something ugly, thus unqualified for a standard mortgage, which would weed out a lot of competition and push the price lower.
To maximize my cashflow and gain landlording experience, I'd do STR and MTR in the other units, as well as the other bedrooms in my unit.
Since most cities won’t allow basement rental units, I’d consider finishing the basement, just well enough for me to live down there (cities don’t care if owner chooses to live in basement), so I could rent out ALL the units/rooms.
I'd save all my cash and look to refi the property in 1-2 years out of the FHA mortgage, so I could use it again if necessary. Depending on how close I was to having 20% equity in the property and being able to avoid PMI, I'd consider using some of my cash to pay down the mortgage when I refinanced. Otherwise, I'd save my cash for the next acquisition.
I’d also be posting on every social media platform and telling everyone I knew that I was looking for more real estate deals. I’d aim for low downpayment land contracts and lease options.
After refinancing out of the FHA mortgage, I'd evaluate if I wanted to repeat the 2-4 unit FHA 203(k) process again or if I had the 20% down to target 5+ units.
While still living in the property, AFTER the refi out of the FHA mortgage, I'd also explore securing a HELOC to tap my equity for emergencies.
Good luck with whatever you decide to do!
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