Loan approval question

[Marc DeLuca]

Hello BiggerPockets Community and Happy New Year!

 I'm currently going into my last semester of college and have been extremely interested in the idea of house hacking for a first real estate investment. After studying the process and running the numbers, I have enough for the 20% down plus a conservative cushion for some rehab. At the moment the only thing holding me back is the location as I've applied for jobs in many different states but have researched each area profusely. I'm wondering when the proper time is to seek out a bank to get preapproved for a loan? I'm not sure if I'm too far away for that milestone as my location will largely be based on where my career takes me, but I'm also curious if that approval is blanketed across states? Any advice to help with my journey would be greatly appreciated! 

[Bradley Padula]

Originally posted by @Marc DeLuca:

Hello BiggerPockets Community and Happy New Year!

 I'm currently going into my last semester of college and have been extremely interested in the idea of house hacking for a first real estate investment. After studying the process and running the numbers, I have enough for the 20% down plus a conservative cushion for some rehab. At the moment the only thing holding me back is the location as I've applied for jobs in many different states but have researched each area profusely. I'm wondering when the proper time is to seek out a bank to get preapproved for a loan? I'm not sure if I'm too far away for that milestone as my location will largely be based on where my career takes me, but I'm also curious if that approval is blanketed across states? Any advice to help with my journey would be greatly appreciated! 

Good for you for thinking to househack! There are loan options with as little as 3.5% / 5% down. Don't feel like you need to do 20% down and tie up all your hard earned cash. Talk to a lender now so you know what realistic price range you should be looking in. Ask them about the FHA loan program for 1-4 unit properties, conventional fannie /freddie loans, and whatever else they may recommend as potential options. Have this convo with 10 lenders. At this point I'd say give them a ballpark credit score so you don't have a bunch of soft inquiries on your credit report and a standard income typically of a new grad entering the workforce in your field. They likely won't give you any sort of preapproval since you aren't working yet, but they can mock up some scenarios so you have a better gauge of if you can afford a 200k house or a 600k house. Keep in mind, with 2 to 4 unit properties, the income from the rented units , a certain % gets factored in as income and boosts how large of a loan you can get. Good luck!