First Time Buyer (FHA Loan question)

[Bryan Paul]

Hi All,

My wife and I are looking to buy a house in Long Beach, NY and we are first time home buyers. Our plan is to buy a 2 family house and use the house hacking method to get started as RE investors. Currently we have an accepted offer but still have not signed the contract yet (Hopefully this weekend). Once of the contigencies in the contract is to put down 10% (5% at signing and 5% down). We would like to pursue a loan between 3.5% - 5% down using an FHA loan. The only risk i see in going this route is if the bank inspector / appraiser does not want to provide lending due to dis-repair of the house. The inspection report came back with all systems in working condition but I was wondering if there was anything specific that FHA (HUD) inspectors look for. Any help with this would be appreciated.

Also I wanted to know if it was common to agree to 10% down in a contract and then later provide a commitment for a loan that shows only 3.5% - 5% down. Thank you in advance for anyone who can provide advice!

Best regards,
Bryan

[Michael N.]

Bryan,
I did the FHA route on a duplex in the DC area last year. It was in decent shape, and didn't run into any major issues in the inspection. I ended up renting out a room in my unit as well and have been living for free ever since. In my opinion, the appraisal when buying isn't a real appraisal (they can see the purchase price), I refinanced a year after buying and was able to take out money and have 20% equity! (Based off appraisal of over 100k above purchase price) Make sure it's a good value, and you're golden.
I'm prepping for the next deal outside the DC area now.
Best of luck.
-Mike