Loan options for newbie

[Kyle Abramov]

Hey guys,

What are my options for financing?

I am looking around for my first rental property whether it be SFH or MFH.

I know I can house hack with a FHA Loan or conventional.

However, is it possible to purchase a property with less then 20% down. Maybe it is not favorable since the mortgage payments might be high.  

Are there any other options I can explore? Or should I just save my money until I can finance something that will lead to a positive cash flow?

Thanks!

[Cody Barna]

@Kyle Abramov You can absolutely purchase a property with less than 20% down. Traditionally an FHA loan only requires 3.5% down and I've even heard of some individuals getting 5% down conventional loans. However most lenders will require 15-20% for a conventional loan if you're purchasing a multifamily. Now when it comes to cash flow it's definitely possible to find a deal that still generates income despite using an FHA loan. If you plan on putting less than 20% down you will need to factor in PMI (private mortgage insurance) that generally cost a few hundred extra per month. At the end of the day if you can find a deal that fits your criteria and at worst breaks even every month, I still look at that as a win. There's a lot more benefits to owning rentals properties than solely cash flow.