House Hack Down Payment Strategy

[Andrew L.]

My wife and I are looking into purchasing a multi-unit and living in one of the units while renting out the remaining ones (aka house hacking). 

We are debating what the right down-payment strategy is for us with this plan. The fact that we would only have to put down ~3.5% if we owner-occupy with an FHA loan is very tempting, however it does significantly expose us to the mercy of the house market and forces us to pay PMI.

Putting 20% down is the safer route however we don't plan to stay in the multi-unit for more than a year or two and putting down 20% would eat into our down payment for our post-multi-unit residence.

Any thoughts are much appreciated!