First Property House Hacking Loan Question

[Account Closed]

Hi Everyone!

My wife and I are property managers looking to get into investing and decided we want to start our journey house hacking a duplex or triplex. We are very secure in our jobs and finances with everything going on and want to be ready to buy should we find a property, so my question is where should we start with loans?

Since we are first time home buyers and will be living in one of the units, how should we start the pre-approval process and what are somethings we should keep an eye out for?

Greatly appreciate any suggestions!

[Garret Jones]

Hi Adam! 

I'm pumped for your journey! I'm in a similar boat - hoping to have my first property under contract this week! When I began the process of really pursuing properties for house hacking, I was also reading Brandon Turner's "The Book on Rental Property Investing". Highly recommend it! He outlines several common methods for financing any kind of deal: All Cash, Conventional Loans, Portfolio Lenders, Private Lenders, Home Equity, Partnerships, and Seller Financing. 

If you're pursuing a conventional loan, it took me a few quick phone calls to banks. I called two so I could compare rates and lending amounts. One bank I currently bank with, another was recommended to me by my insurance broker.

Over the phone, both banks explained two common options - conventional loans for 3% down for single family homes (or 5% down for small multi-family) and FHA loans for 3.5% down. These options were already outlined in Brandon's book so it was nice to be familiar with it.

Chapter 14 is about how to get a loan approved and he breaks down the major criteria lenders look for. During the conversations I had with bankers, they gathered most of my information over the phone such as annual income, current debts, and information to pull your credit. It was really simple.

Then, they will want to verify information with most recent pay stubs, W2s (or academic transcripts if you are just coming out of college), bank statements with savings accounts for down payments, etc. These documents are easy to upload and it could be nice to have them saved as a PDF and ready to go - and mortgage officers will clarify everything they need!