How do you house hack for the second property?

[Fahadbin Alam]

So I'm a bit confused: So here's the plan buy a duplex with a fha loan so 3.5% down and then live in one unit and rent out the other. Cash flow 100$ let say.

So i got that. Then a year and 1 day goes by. I want to house hack another house of course. How would I go about it?

1. Do I just save up enough money to save up for a downpayment?

2. Do I reuse the FHA loan?

3. What happens to my first property am I able to move out of it and rent it out?

[Jonathan Bombaci]

Hi @Fahadbin Alam this is a common question we get all the time when we’re helping Househacker’s in greater Boston. Let’s go at this 2 ways:

FHA Ladder: If using FHA loans to househack.

1. Yes you can save up another 3.5% for your next downpayment. 
2. You'll need to refinance out of the FHA loan to reuse it but also explore your state specific housing programs. We have mass housing which is a better version of FHA you could carry both a FHA and Masshousing loan without any issues.

3. Assuming you're only buying assets that will cashflow when you move out, and you're running the calculation with at least 25% load for vacancy, maintenance, capex, and management, the property should actually decrease your DTI ratio making the next loan easier.

Conventional financing. You can get 5-10% down conventional financing on owner occupied 2 families from many credit unions. We even did this for a client on a 2 family with 3 units in it last year. If you go this route you don't need to worry about freeing up the FHA loan for the 2nd purchase. You can just buy a new owner occupied 2 family every year and max out the relationship with the credit union before moving onto the next one.

I hope this helps, best of luck!

Jon