What are my financing options?

[Kenzie McIlvoy]

Hello! My husband and I are living in a single family that was bought with an FHA loan. It was purchased in my name only prior to marrying my husband. We are looking at buying a duplex as a live in flip and hold while renting out our current SF.

If we were to use another loan for our second property, we're having trouble understanding what our options are. We understand that we can only have one FHA loan but we're not sure if he can get a FHA with his name only (one for each of us) or if we're only allowed one between the two of us. We've also considered refinancing our current house to a conventional loan, especially because our interest rate is 4.75%.

If he doesn’t get a loan in his name only, our biggest question is if/how it’s possible to get approved for two loans from the bank. I’ve tried asking around and doing research but I don’t understand the process of finding the deal and getting another loan from the bank. We’ve heard several people on the podcast say things like “we got a second loan” but can’t find exactly what the process was for that. If anyone is knowledgeable on this topic we would greatly appreciate some explanation. 

[Allan Smith]

Title The duplex is husband's name only, then get fha in his name only.

or, just get a plain old residential loan. You'll need 20% down, but terms are good.

or, get a commercial aka portfolio loan with a local bank or credit union. They view your purchase as a business activity. A minority of those banks will let you live in it.

or, get a hard money loan.

or, get private money from friends and family (or could just use it for a down payment)

[Jody Sperling]

Find a local bank in your area, not a national bank. A google search will help if you're unsure where to start. Call at least five local banks. Explain your situation. Share your finances and your goals. At least one of the five bankers will say the magic words, "We can help you." 

If you've been in your current residence for at least one year, you qualify for a primary loan, which will have better interest rates and require a much lower downpayment for purchase. Avoid the FHA thing in the future if possible.

You will have to refinance out of the FHA loan to qualify for the primary, but that should be a benefit to you anyway. You'll save on monthly payments, lower our interest rate, and get rid of PMI, which on an FHA loan you can never pay your way out of. If the refinance gives you extra cash, all the better to buy your live-in-flip.

Less than a year ago, my family was in your same situation, and we now own two rentals and will be purchasing our third by June. I was overwhelmed by finance questions, and my wife was terrified of taking the step. But once we finished rehabbing our personal home and renting it, after buying a new personal home, we were so grateful.

Don't let fear slow, or hinder you. Best of luck!