PSA: FHA 3.5% down house hacking is similar to hard money

[Chris Mason]

I have two people buying MFRs at very similar price points.

One is evaluating FHA 3.5% down v 25% down.

FHA allows him to keep $130k more in his savings account, at the cost of paying $1221/month.

Let's treat that $130k they are maintaining access to as a stand-alone interest-only loan:

$1221 * 12 / $130k = 11.3%.

I'm not saying this to bash FHA financing. In fact, 11.3% for a hypothetical 2nd loan that yields a combined loan to value of 96.5%... I doubt you'd find any hard money lender to accept second position at only 11.3% with a CLTV of 96.5%!