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Posted over 3 years ago

The 4 best Loans for House Hacking

“Andres, but I need to have around 20% downpayment to buy a home, right?”

You are correct, IF you are an investor, but since you are house hacking and living in the property, you can buy a property by putting 0-5% down. That is great news!

A lot of people think that you need $40K-$60K+ to buy a home but that is not true. You can buy a home with less than $10K down!

In this post I’m going to explain the 4 types of owner-occupant loans that you can qualify for, with regular mortgage lenders, credit unions, and major banks. Generally, for a property to be considered owner-occupied, the owner must move into the residence within 60 days of closing and live there for at least one year. As an owner occupant you can take advantage of the best interest rates and the lowest down payments!

So let’s get started….

* MIP/PMI stands for Mortgage Insurance and is an additional monthly fee you pay to protect the lender’s financial interests in case you don’t pay your loan. *These terms will be used interchangeably.*

*Loan Guarantee means that the Federal government will cover the borrower’s debt obligation in case the borrower stops paying the loan.*

1) Federal Housing Association (FHA) Loan:

In 1934, amidst the Great Depression, Congress created the FHA in order to stimulate the housing market. These federally guaranteed loans essentially reduce lender risk and make it easier for borrowers to qualify. The FHA loans are designed for low-to-moderate-income borrowers; they require a minimum 3.5% down payment and lower credit scores than many conventional loans.

Normal 1599918323 Pros Cons  1

Conventional loans aren’t guaranteed by the federal government and, as a result, typically have stricter lending requirements by banks and creditors. Conventional loans offer 3% down for first time home buyers and 5% down anytime thereafter.

Normal 1599918365 Proscons Conventional


3.) Veterans Affairs (VA) Loan:

The VA Loan is a mortgage loan issued by approved lenders and guaranteed by the U.S. Department of Veterans Affairs (VA). This loan helps veterans, active duty military members and their families purchase homes or refinance their mortgages for little to no money down!

Normal 1599918464 Proscons Va


4.) United States Department of Agriculture (USDA) Loan:

A USDA home loan is a zero down payment mortgage for eligible rural and suburban homebuyers. USDA loans are guaranteed by the United States Department of Agriculture. Income limits to qualify for a home loan guarantee vary by location and depend on household size.

Normal 1599918540 Usda

Now to quickly recap this I’ve created a chart for you to see the requirements.

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* DTI stands for Debt-To-Income and measures an individual’s monthly debt payment vs his or her monthly gross income. Lenders. The lower the DTI the better chances of getting a loan.*

*Example: Each month, John pays $1,000 in car insurance, $200 in phone bills, and $300 credit cards. His job pays him $3,000 monthly. His DTI is $1,500/$3,000: 50%.*

I look forward to hearing from you and would love any feedback! 



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