Best choice for first multi-family based on down payments?

Question

I want to confirm that I am correct:

For the first multi-family, which we are going to occupy, I can put down 3.5% with an FHA, whether it has 2, 3, or 4 units?

Then for the next multi-family home we buy, we'll need to use conventional financing, with at least 20% down for a duplex and 25-30% down for a triplex or quad?

We are looking for our first multi-family, which we plan to owner occupy. If I am understanding the above correctly, does this mean that we should buy a more expensive property for our first, perhaps a triplex with three income-producing apartments, since that is our one opportunity to pay only 3.5% down? Then (ideally) we can accumulate some duplexes that we'll have to put down 20% for?

Sandra Bean · Answer

Planning on buying a multi-family because me and my mom are both seniors and need to have income coming in. This will be a cash purchase. Need to know what are the great areas in Cincinnati, ohio.

Ceasar Rosas · Answer

@Sara Furlong

The way I see it, you are correct. But let me just add this. You can buy the 1st property with an FHA loan, but if you can buy a deal, something you may be able to renovate and build up equity, you can possibly refinance to a conventional loan and use the FHA loan all over again. You will need at least 20% of equity in the home to make it work, but it's possible. And I would also say the more units the better. It should help you build cash faster and if you buy it right a 4 should cash flow better than a 2. I hope this helps, Good luck!