FHA Loan or 20% down on fourplex, first property
I am buying my first property, which is a fourplex. It will be owner-occupied and I will be living in one unit.
I can afford to put 20% down and get a conventional loan, but should I really be considering an FHA Loan and putting something like 5% down and using the other 15% towards procuring another investment property?
Or, would I be better off putting 20% down on this property and 20% down on my next property if I can afford it?
Is there a financially sound answer to this situation?
Thanks!
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#1 House Hacking Contributor
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#1 House Hacking Contributor
- Real Estate Agent
- Colorado Springs, CO
In Colorado Springs triplex and fourplexes don't pass this test and FHA lenders usually require 15-20% down (or whatever it takes to pass the test).
In order to pass the self-sufficiency test, you'll need to prove that 75% of the rental income you're likely to receive will exceed the full monthly mortgage payment. FYI there is no self-sufficiency test for a duplex.
https://www.flcbmtg.com/wp-content/uploads/2021/03/FHA-3-4-Unit-Self-Sufficiency-Worksheet-3-2021.pdf
- Ryan Thomson
