Conventional loan & cashflow or FHA & break even?

[Steven Catudal]

Hi all,

I am under contract for my first property (du-plex with one unit rented out) and had a question on the financing. I have good credit (730+) and solid income.

I am currently lined up for a conventional loan with ~15% down, 6.5% rate, and low closing costs but this would use up most of my liquid cash (minus emergency fund). Based on my calculations, this would lead to cashflows around $700 per month.

I am now looking more into FHA loans and wondering if that would be a better idea since I can only use this on my first property. This way I could save lots of the liquid cash I have in case I want to purchase another property. However, after doing the math on the 3% down payment, I would no longer cash flow. I have income income to off-set some negative months.

What do you all think is a better idea?