Conventional or FHA loan for house hack?

Question

I'm not quite sure how the process goes for applying for an FHA loan but I am familiar with the terms. But I also know a conventional loan with a bank can be another route to take for my first primary residence home. I have been making 10-99 income for about 2 months now and I have the money for a down payment as well as construction costs (if I decide not to go with a turnkey) but I know I need 2 years of 10-99 income to qualify for any loans. What route should I take?

Is there a way I can get a conventional loan if I show them proof of funds even though I don't have the required 2 years of 10-99 income? Or should I stick to an FHA loan.

I know this is a really choppy post with multiple questions so I would greatly appreciate any advice. Thanks in advance!

James Wise · Answer

Typically speaking the barrier to qualifying for an FHA loan is lower than a conventional loan, so it looks like that'd be your best shot at getting approved.

Nick Belsky · Answer

That's a tough spot.  I am a mortgage broker.  None of my lenders would touch you as a 1099 or Self Employed borrower without at least 1+ year of consistency.  You may be able to qualify if you mixed your W2 history in with the 1099 but that's a stretch.  I won't say no one out there will do it, but you've drastically limited your options.

Nick Belsky

Rodney T. · Answer

My advice is to speak with a few loan officers well ahead of time and they can break down how they qualify buyers in your area. This will help you to know specifically how to qualify. 1099, credit scores, etc specific to you. There’s no harm in sitting down and having a discussion; loan officers and others routinely recommend securing financing before finding a deal so I would have the loan experts educate you on the specifics.

Rafael Perez · Answer

@Nick Belsky That's what I was expecting pretty much everybody has been telling me the same thing. I believe my best bet might be to take on a W2 job for at least 6 months. Thanks for the advice especially coming from a lender!

Rafael Perez · Answer

@Rodney T. Yea that's what I believe is the best direction to head into. I'll ask local investors for some referrals so I can figure out what I need to do to get pre-qualified.

Conventional or FHA loan for house hack?

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