All Forum Posts by: Michael Cohen

@Alex McLean - 20% down on a $60K property is a base loan amount of $42,000. You're going to have difficulty finding lenders willing to lend on that amount. Many won't go below $80K-$100K.  You may want to try some local Credit Unions. There are a lot of good ones in MD. 

Hi @Carlos Cevallos - all conforming (conventional or government) loans require a 2-year employment history, but university and/or trade school is considered as employment so you would have been fine with only 1-year work history. However, they must project out income for at least three years and if you are planning to not have any income, the lender will want to know how you intend to pay your mortgage while going to school and not having an income.

There are two issues here:

1) 60-day occupancy. There are no exceptions to the guideline:

2) Whether or not to purchase the property using FHA under the circumstances you described. Your choices are:

• ask the tenants to vacate early; pay them if necessary, as suggested by @Courtney Preston
• purchase using FHA HomeReady (15% down on duplex, as stated by @Chris Mason)
• Find another property for FHA purchase
• commit mortgage fraud by not honoring the FHA occupancy requirements.

NOTE: you will find a lot of discussions on BP about the likelihood of being discovered for not occupying the property, and the respective punishment for doing so, but the end result is that it's mortgage fraud.

@Ankit Joshi - As a lender, I work with a lot of realtors who focus on buying, selling, and investing. I'd be happy to give some recommendations as well. PM me if you want some names.

@Jacob Ansbacher - FHA loans were designed to facilitate home ownership and are not intended for investments. As such, they require the property to be owner occupied. At closing, you'll sign that you intend to occupy the property for at least 12 months.

Also, construction on a full 203K must be completed in six months, so the rehab phase wouldn't exceed the 12-month minimum standard. HomeStyle is a more investor-friendly renovation loan from Fannie Mae. It's 5% down and you must own the property for 6 months.

I can't really tell you how to tell if the loan is properly structured because there are too many issues that could trip up a file. Ultimately what I'm suggesting is that their Loan Officers / Underwriters at online lenders are notoriously bad at identifying whether someone adheres to loan (in this case FHA) guidelines in regards to income, assets, credit, property condition, etc. until it's way too late and closing is almost upon you. Truthfully, this is one of those times you have to rely on an expert, such as a quality loan officer. If your agent trusts this person, then you should as well.

No, doing the transaction via email is not a red flag. It's more common among more seasoned and experienced Loan Officers. I would suggest that if you're serious about getting a mortgage, ask him/her what documents you'll need to provide, gather them up, and sit in his/her office for an hour or two during business hours to go through everything. It will be much more efficient than the back-and-forth that will inevitably occur via email.

@Jennifer Cheu - I would strongly recommend you stay away from Lending Tree, Quicken, or any online lender. They typically do a very poor job properly structuring the loans, calculating income, etc.

Without a thorough review of your income, assets, debt-to-income, etc., we (lenders here on BP) wouldn't be able to recommend one loan over another. However FHA is the only loan that allows a down payment of 3.5% on a 3-unit property. There is no way to forego PMI unless you put 20% down. On an FHA loan, PMI is for the life of the loan, so when you hit 20% equity, you may want to refinance into a conventional loan.