Recent College Grad: FHA loan my best option?

[Fred Jung Kim]

Hello Bigger Pockets,

I am a recent college graduate and currently work as a leasing consultant for a large high rise in downtown Los Angeles.

Previous to this, I was an assistant to a commercial real estate broker so I do have some working knowledge of real estate.

After listening to hours on hours of the Bigger Pockets podcast, I have finally decided sign up and really educate myself so that I can get my first deal within a year or so.

I make around 40-50k a year depending on the commisions I make and plan on saving atleast $10,000. I have been reading about FHA loans that only need 3.5% down and was wondering if this would be my best option with only 10k in savings.

[Josh Day]

Fred Jung Kim yes it's called an FHA 203K loan and rehab costs are rolled into the loan amount. Also remember the advantage of FHA over conventional is 3.5% down on 1-4 unit properties whereas with conventional you can get 5% or lower down, but that's only good for SFH. It goes up to 15% for duplex and more for tri/quadplex.

My advice would be talk to a lender knowledgeable on this. I'm not sure where you are at on student loan debt balance, but FHA does 1% of your student loan balance regardless of if you are on an income based repayment plan, which can really affect your DTI ratio quickly especially on a 50K/year salary.

The reason I know this is because I am in similar shoes right now and about to buy my first property to house hack in February. Congrats on saving 10K/year that's impressive. If you haven't yet read Scott Trench's book Set For Life I would highly advise reading it. Let me know if you have more questions.