All Forum Posts by: Michael Cohen

HomeStyle is a fantastic loan: lower down payment (15% of acquisition costs) and has the exact same risk profile as any other loan. This sounds like the lender is steering him towards a loan where she/they make more money. I would suggest speaking with another lender. 

Yes, conventional investment financing is a great option. 20% to 25% down payment. Or possibly Fannie Mae homeStyle (15%) down if it needs any work.

As everyone else mentioned; FHA is a residential loan, defined as 1-4 units. 5+ units are considered commercial so you would be looking at a commercial loan or hard/private money.

Originally posted by @Mark Cison:

Then why even do FHA at that point when you can do conventential.

And this is the LTV of the purchase price plus work write up in total correct?

As I said, FHA allows for more lenient DTI, credit history, etc. So someone might be eligible for FHA but not conventional. Your down payment would be 25% of the total loan. The total loan amount is the purchase price + renovation costs + contingencies + closing escrows/prepaids + fees.

Hi Kaylyn Dart - thank you for serving. As others have pointed out, the VA loan have some tremendous benefits as well as some drawbacks, as all loan products do. I have a VA loan myself and couldn't be happier with it, but it isn't for everybody. Your original post did not mention income. As a college student, what income would you have available to you in order to pay for the home? G.I. Bill, and other military educational benefits, do not count as qualifying income.

I agree that the primary benefit of an FHA loan is the low down payment. It also has more lenient guidelines in terms of DTI, credit score, credit history, etc. The lender is going to finance the lower of the sales price or appraisal price. For sake of argument let's say that's $100,000. 75% LTV is $75,000. You must come up with the remaining $25,000 as a down payment.

Originally posted by @Keenan Rusk:

@Account Closed Hey Anthony, I'm curious which route you ended up taking regarding the FHA loan vs. Freddie Mac Home Possible.

I live in Baltimore and am currently looking at house-hacking a 2-4 unit multifamily for my first property. I'm looking to take advantage because of the more favorable terms, specifically lack of the upfront 1.75% mortgage insurance premium and PMI that appraises out at 80% LTV (with FHA, PMI is for the life of the loan and it takes a while to gain the necessary 15-20% equity that most lenders require for refinancing out of it since you only put down 3.5%). As Christopher mentioned, you cannot own any property at the time of closing so in using Home Possible first, it seems like you would still have access to an FHA loan a year later for a second house hacking opportunity. Best of luck!

While you do not have to be a first time home buyer to utilize an FHA loan, there are some big caveats to that which could restrict the Home Possible > FHA plan. Specifically, you cannot use the rental income from the departing residence as qualifying income unless buying a larger home due to growing family, employer-forced move, etc. It's best to speak with a local lender and discuss your options.

There is no rule/guideline that states the co-borrower must occupy the property. If they do not, however, the down payment is 25%, not 3.5%.

Unlikely; one of the exceptions in owing two FHA homes is purchasing a larger home due to a growing family (kids, aging parents, etc.) Going from a SFH to a duplex will signal to the underwriter (correctly) that his intent is to utilize the FHA home as an opportunity to "house hack." There are other low down payment loan types that may work for him, such as 5% down conventional.

While FHA is "only" 3.5% down payment, there's a 1.75% funding fee, making your cash out of pocket up front 5.25% - ignoring closing costs - whereas a 5% down conventional is cheaper upfront, lower MI, and that MI goes away eventually.

Originally posted by @Chris Breezy:

Ur saying theirs also a lender insurance that he failed to mention?

Lender – paid, meaning they're paying the MI on your behalf and then charging you a higher interest rate in exchange for doing so.