All Forum Posts by: Brendan Daly

Hi All,

I'm looking to get some community input on how you would finance a househack. I'm looking to purchase a 2 - 4 unit property and live in one of the units. I know that doing an FHA mortgage is quite popular on BP because it is a good way to get into real estate investing with as little money as possible. However, would you do an FHA mortgage even if you could do conventional 20 - 25% down? I have excellent credit, the ability to put 20-25% down and strong W2 earnings. I have spoken with some lenders and I have a few options:

1. Do an FHA and pay the upfront and monthly MIP

2. They have offered portfolio loans (10/1 ARM or a piggyback fixed 30) that would enable me to do 10% down without MIP but a slightly higher rate (about .25% higher)

3. Do a conventional 30 year with 20 - 25% down depending on the number of units

My ultimate goal is to live in the property for a year and then purchase another one in a year. With the first 2 options (FHA or 10% portfolio loan), I could easily have enough money for another downpayment. If I do a conventional, then I would look to do a HELOC in a year to reduce the property's equity position and put it toward the down payment of a second property. I've been told some credit unions will do up to 95% LTV HELOC so that would basically be like having an FHA mortgage without upfront or monthly PMI.

What would you do - pay a slightly higher rate (or MIP) now for more a higher LTV and hold on to cash for a year, or do a conventional now and pull out equity via HELOC in a year? My assumption is I can get a HELOC within a year of the purchase, but please let me know if there are more stringent holding periods to qualify for a HELOC.

Thanks!

Brendan

Thanks @Steve Babiak - this was outside of BP so the location was not the issue. Apparently, not all FHA lenders will originate this type of triplex deal. Only after pushing back on them do they admit that it is possible to do, but their companies will not originate the loan.

@John Knisely - sending you an email now. Thanks. 

Hi BP -

I am looking to house hack in Philadelphia - owner-occupied Duplex, Triplex, or Quad. I currently have my eye on a triplex, but I am running into problems finding a lender who will originate an FHA loan (3.5% down) on a triplex. I keep getting a response stating that 25% down is required on all multi-unit properties, but everything I have read states that it is possible to do 3.5% down on a triplex using FHA. Does anyone have a lender referral who might be able to help me with what I am looking for?

Thanks,

Brendan

Keywords - Mortgage, FHA, Lender, Loan, Philadelphia, Pennsylvania

Hi April -

Do you have any inside photos? How would the title be conveyed?