House Hacking FHA Downpayment Strategy

[Priscilla Paul]

I'm looking to purchase a 3-unit multifamily next year that I would occupy 1 unit of and rent the other 2. I will finance using an FHA loan and I know the minimum downpayment is 3.5%, but putting so little in minimizes cash flow. The most I would be able to put down would be 7% and I'm trying to figure out if I should put the 7% in for the downpayment or just put 3.5% and hold the other 3.5% towards other investments/future property. (For this scenario, please assume closing cost will be covered). Any advice much appreciated!

[Lesley Resnick]

Cash preservation is key to this business.  You can always find deals, coming up with down payments can be a challenge.  If you have the down, there is almost always someone wiling to finance.

I would only put down the 3.5% and keep the cash. When you have 20% equity in the property I would consider a refi. You will need to look at the current rates and consider an equity loan. Fannie / FHA is the cheapest money you will ever borrow, get as much of it as you can!