Finiancial Advice Needed 1st Property

[Leland Buerman]

So I have been saving for a couple years now to buy my first multifamily. I have 35k in the bank for closing, plus 10k reserves, a 762 credit score, pre-approval for a 150k FHA loan at 2.7% fixed, but only 120k pre-approval with 20% down on a Conventional (2-family) or 25% down conventional (3-family).

My current market is pretty tight for multifamily units within my price range (only 13 listings). I have the extra cash reserves to throw on the 150k FHA to get me a little higher; and I found a property I loved for 159k but the seller doesn't accept FHA. It surprised me a bit since the house was in great shape; but sure enough it was written in their listing. I then checked the remaining 13 listings and only 2 accept FHA - one in an arguably bad neighborhood, and another is too small for my needs as an owner occupied; however, most are above the 120k that I qualify for with conventional. One is close at 125k that needs work and is in a fairly decent neighborhood; but it doesn't have much land or a garage.

I make around 55-60k a year but only 40k salary from my 9-5, and the only assets I own are my 2 cars, and seasonal use cabin - which I own outright - so my borrowing capability is limited since the bank will not accept the cabin as equity. Technically I have a 203b with 17k in it but I cannot use/access it until I retire at 55.

Should I buy the house for 125k just because it’s in my budget for conventional?

Hold out for a FHA eligible listing to pop up within my price range? - My thought was that in this way I would have more money to buy my second rental house on a conventional loan next year...

Or go see another lender outside of my local credit union that might not require 20-25% down plus closing costs and cash reserves?