As a 1st time home buyer Having mixed feelings about financing huge amount $
Member since 2020 · 146 posts · 39 votes
As a 1st time home buyer Having mixed feelings about financing huge amount $
Most Popular Reply
Ray WilliamsBusiness Member
Lender · Denver, CO · Member since 2017 · 153 posts · 69 votesJimmy, everyone here nailed the HOA angle, so I will stick to the part of your post nobody addressed yet: the financing itself. You said you do not want to be tied down to that loan, and that feeling is normal for a first mortgage, but it helps to know a mortgage is not actually a permanent commitment the way it feels on day one.
A 30 year fixed rate loan locks your principal and interest payment for the life of the loan while rent in your market keeps climbing every year, so the huge number gets easier to carry in real terms over time even if your income stays flat. On top of that you have several exits built in from day one: you can refinance if rates drop, you can recast the loan for a fee if you ever come into extra cash and want to lower the payment without a full refi, and you can sell whenever you want since there is no prepayment penalty on the vast majority of owner occupied loans today.
If FHA is part of your pre-approval, know that the mortgage insurance usually stays for the life of the loan unless you refinance out of it once you hit around 20 percent equity, while conventional mortgage insurance drops off automatically. That difference alone is worth asking your loan officer to model both ways before you pick a program, since it changes your real monthly cost more than single-family versus townhouse does.
13 Replies
- 1moArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 913 votes
Quote from @Jimmy Rojas:
I live in Phoenix,az and currently shopping for my first home/investment, as a total newbie at RE im looking at preferably move in ready with minor repairs if any, single family homes, 1k + sqft homes, 1+ bathroom, 3 + rooms, in average neighborhood, here in Phx and vicinity those start at $280k, I got pre approved , putting down 25k, 9k closing cost, $2k piti, this being my first huge investment i dont want to be tied down to that loan, i wish i had the funds i do now back in the 2008 crisis, could of bought 3 single family houses in decent shape cash lol.
What do you guys think about Town houses, the only drawback with those is the Hoa , some will not even let you rent out your place.
If this is your first purchase, I'd focus less on whether it's a single-family or townhouse and more on the numbers and your exit options. A townhouse can absolutely work, but HOA rules, rental restrictions, fees, and special assessments can quickly change the deal, so read those documents carefully before committing. Since you're putting most of your available cash into the purchase, I'd also make sure you keep a healthy reserve for repairs and vacancies. Your first property doesn't need to be perfect; it just needs to be a deal you can comfortably hold if the market doesn't move the way you expect.
- Lender · Washington DC · Member since 2026 · 65 posts · 16 votes1mo
Quote from @Jimmy Rojas:
I live in Phoenix,az and currently shopping for my first home/investment, as a total newbie at RE im looking at preferably move in ready with minor repairs if any, single family homes, 1k + sqft homes, 1+ bathroom, 3 + rooms, in average neighborhood, here in Phx and vicinity those start at $280k, I got pre approved , putting down 25k, 9k closing cost, $2k piti, this being my first huge investment i dont want to be tied down to that loan, i wish i had the funds i do now back in the 2008 crisis, could of bought 3 single family houses in decent shape cash lol.
What do you guys think about Town houses, the only drawback with those is the Hoa , some will not even let you rent out your place.
It’s completely normal to feel nervous before making your first purchase, buying your first property is a huge milestone, but the numbers you laid out for Phoenix are actually very solid for a starting point.
A few key points to consider regarding your townhouse vs. Single Family Home (SFH) question:
- HOA Rental Restrictions are a Real Risk: If your long-term goal is to hold this as an investment or house-hack later, be extremely cautious with townhouses. Many HOAs enforce rental caps (e.g., only 10%–20% of units can be rented at once), minimum ownership periods (requiring you to live there 1–2 years before renting), or outright bans on short-term/long-term rentals. Always review the CC&Rs and HOA meeting minutes before making an offer.
- SFH vs. Townhouse Appreciation: SFHs generally appreciate faster and give you total control over the property without monthly HOA dues that can increase unpredictably.
- Reframing the Loan Anxiety: A $2k PITI payment on a fixed-rate loan locks in your living costs. While rent increases over time with inflation, your principal and interest stay fixed, and you build equity every single month.
If you can stretch slightly to secure a SFH with minimal/no HOA in the Phoenix metro area, it will give you significantly more exit strategies down the road. Best of luck with the search!
- Lender · Pickerington, OH · Member since 2026 · 49 posts · 39 votes1mo
I think the mixed feelings are completely normal, that first mortgage number looks HUGE when you’ve never had one before 😂
I’d focus less on the total loan amount and more on whether the monthly payment is comfortable, you still have a solid emergency fund after closing, and you’re buying something you could realistically hold for several years. You definitely don’t want to put every dollar you have into the down payment/closing costs and be house poor right out of the gate.
Townhomes can actually be a good first purchase, especially if you want less exterior maintenance, but I’d look really closely at the HOA before buying. Not just the monthly fee, check the financials, reserves, any upcoming assessments, insurance coverage, and especially the rental restrictions if you think you may turn it into an investment later. Some have rental caps or waiting periods, and others don’t allow rentals at all.
Personally, if your long-term goal is investing, I’d probably lean toward the single-family if the numbers are reasonably close. It usually gives you a little more flexibility down the road.
- 1moJesus SuarezBusiness MemberLender · TX, FL · Member since 2025 · 131 posts · 54 votes
Congrats on the pre-approval! Townhouses can be a great entry point, but as an investor, you have to be incredibly careful with the HOA rental rules.Many associations in Phoenix have strict rental caps or require you to live in the unit for 1 to 2 years before you are even allowed to lease it out. If you get stuck on a rental waitlist, your investment strategy is completely dead in the water. Plus, rising HOA fees will eat directly into your cash flow and increase your $2k PITI over time.If you look at townhouses, make sure your agent pulls the CC&Rs (the bylaws) before you make an offer to verify the rental policy. Otherwise, keep hunting for a small single-family home where you call the shots!
- 1moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Quote from @Jimmy Rojas:
I live in Phoenix,az and currently shopping for my first home/investment, as a total newbie at RE im looking at preferably move in ready with minor repairs if any, single family homes, 1k + sqft homes, 1+ bathroom, 3 + rooms, in average neighborhood, here in Phx and vicinity those start at $280k, I got pre approved , putting down 25k, 9k closing cost, $2k piti, this being my first huge investment i dont want to be tied down to that loan, i wish i had the funds i do now back in the 2008 crisis, could of bought 3 single family houses in decent shape cash lol.
What do you guys think about Town houses, the only drawback with those is the Hoa , some will not even let you rent out your place.
stay away from anything that limits your options.
Logical Property Management4.9451 Reviews - Banker · MA · Member since 2026 · 120 posts · 31 votes1mo
The HOA rental restriction thing is actually worth taking seriously before you make an offer, not after. Some HOA bylaws cap the percentage of units that can be rented at any time (often 20-30%), and if that cap is already hit, you could be stuck owner-occupying longer than you planned with no path to rent it out. Beyond the investment angle, a high percentage of investor-owned or rental units in a complex can also make the property harder to finance conventionally down the road, which matters when you eventually sell. On a $280k purchase with 25k down you're in FHA or conventional territory, and both have condo/townhouse project approval requirements that tie directly to those owner-occupancy ratios. Worth pulling the HOA docs and getting the project reviewed before you fall in love with a specific unit.
James Driscoll
- Member since 2020 · 146 posts · 39 votes1mo
Quote from @James Driscoll:
The HOA rental restriction thing is actually worth taking seriously before you make an offer, not after. Some HOA bylaws cap the percentage of units that can be rented at any time (often 20-30%), and if that cap is already hit, you could be stuck owner-occupying longer than you planned with no path to rent it out. Beyond the investment angle, a high percentage of investor-owned or rental units in a complex can also make the property harder to finance conventionally down the road, which matters when you eventually sell. On a $280k purchase with 25k down you're in FHA or conventional territory, and both have condo/townhouse project approval requirements that tie directly to those owner-occupancy ratios. Worth pulling the HOA docs and getting the project reviewed before you fall in love with a specific unit.
James Driscoll
I would never put $280k on a town house with hoa, that figure was more for a single family home,
- 1moRay WilliamsBusiness MemberLender · Denver, CO · Member since 2017 · 153 posts · 69 votes
Jimmy, everyone here nailed the HOA angle, so I will stick to the part of your post nobody addressed yet: the financing itself. You said you do not want to be tied down to that loan, and that feeling is normal for a first mortgage, but it helps to know a mortgage is not actually a permanent commitment the way it feels on day one.
A 30 year fixed rate loan locks your principal and interest payment for the life of the loan while rent in your market keeps climbing every year, so the huge number gets easier to carry in real terms over time even if your income stays flat. On top of that you have several exits built in from day one: you can refinance if rates drop, you can recast the loan for a fee if you ever come into extra cash and want to lower the payment without a full refi, and you can sell whenever you want since there is no prepayment penalty on the vast majority of owner occupied loans today.
If FHA is part of your pre-approval, know that the mortgage insurance usually stays for the life of the loan unless you refinance out of it once you hit around 20 percent equity, while conventional mortgage insurance drops off automatically. That difference alone is worth asking your loan officer to model both ways before you pick a program, since it changes your real monthly cost more than single-family versus townhouse does.
- Member since 2020 · 146 posts · 39 votes1mo
Quote from @Ray Williams:
Jimmy, everyone here nailed the HOA angle, so I will stick to the part of your post nobody addressed yet: the financing itself. You said you do not want to be tied down to that loan, and that feeling is normal for a first mortgage, but it helps to know a mortgage is not actually a permanent commitment the way it feels on day one.
A 30 year fixed rate loan locks your principal and interest payment for the life of the loan while rent in your market keeps climbing every year, so the huge number gets easier to carry in real terms over time even if your income stays flat. On top of that you have several exits built in from day one: you can refinance if rates drop, you can recast the loan for a fee if you ever come into extra cash and want to lower the payment without a full refi, and you can sell whenever you want since there is no prepayment penalty on the vast majority of owner occupied loans today.
If FHA is part of your pre-approval, know that the mortgage insurance usually stays for the life of the loan unless you refinance out of it once you hit around 20 percent equity, while conventional mortgage insurance drops off automatically. That difference alone is worth asking your loan officer to model both ways before you pick a program, since it changes your real monthly cost more than single-family versus townhouse does.
Thanks, on paper it does make sense, i guess it depends how much you are currently paying rent and everyones situation is different, but as you know mortgage is just part of your expenses as an invester, if at first you are living at the house, you have utilities to take care of that can easily climb $500 +, also insurance minor repairs on home, outside maintnance. This is why im currently looking for a single family house as close as possible to move in ready with little to no repairs needed, in Az depending on the sellers reason to sell with offers you can get them for $280k anything less is asking for big repairs .
- 1moPatrick O'SullivanBusiness MemberProperty Manager · Phoenix, AZ · Member since 2024 · 525 posts · 197 votes
Even a move-in-ready house needs something eventually. Be careful paying a premium for "move-in ready" just to avoid repairs. Cosmetic work and predictable fixes can be easier to budget for than a house that looks finished but has aging HVAC, roof, or plumbing. Since this could become a rental later, run it through two tests: can you comfortably afford it as your residence with a healthy reserve, and if you move out, do realistic rents cover the mortgage, taxes, insurance, vacancy, and capex? Pass both, and the mortgage size matters a lot less than whether you bought something you can hold comfortably.
get MULTIfamily Property Management4.7220 Reviews - 1moZach UptonPro MemberContractor · Bridgeport, CT · Member since 2015 · 10 posts · 7 votes
Make sure before you buy the market rents in your area will cover the PITI plus maintenance, capex and vacancy. That will take the pressure off knowing if you want out your future tenants will be paying off the "huge financing amount" and hopefully some additional cashflow. Conservatively run the property through the rental calculator and that should give you the confidence to proceed. Good luck!
- 1moRyan SpathBusiness MemberReal Estate Agent · Boise, ID · Member since 2017 · 557 posts · 376 votes
Yea, that is the reality of todays market. As an agent I hear folks reference the 2008 timelines, which in theory sound good however folks were scared and didnt have the cash they do today.. Have you at all considered using your FHA loan to do a house hack on a small multifamily such as a duplex? I am not familiar with your market, towns, streets etc. A quick glance on homes.com and i found several duplexes in the price range you are mentioning above. If you are able to get a 2/1 each side for this same amount and rent one side for $1500 it will greatly offset your monthly payment. Also, at this price point it will likely pay for itself should you have to or chose to move out for the next property. If this sounds interesting, send me a DM with your email and I can talk more and share the excel sheet I use to analyze deals.
- 1moWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
Townhouses may very well work for you, as long as the buying cost and maintenance are superior to the equivalent single family home. The HOA will be the key factor that I'll look into at the very beginning since it could alter the equation quite rapidly. When choosing the first home, I'll opt for the one with stronger fundamentals than the other type of property.
Good luck!
NETWORTH BUILDERS5236 Reviews
Join the conversationCreate a free account to reply, vote on answers and follow this thread.