Financing a House Hack

[Account Closed]

My girlfriend and I are getting ready to get our first investment property and we want to do a house hack. We have only a very small amount to use towards a downpayment. (~$3-5,000) We are exploring all of our options as far as financing the deal. Obviously, FHA is an option, but because it includes PMI for the life of the loan we are not a fan of that option at all, as for conventional loans those are definitely more attractive. We had one credit union agree to finance 80% and allow the seller to finance the other 20%, and then a few days later they changed their offer. Now the most leveraged we can get this deal through them is 75% bank 12% seller, leaving us to come up with 13% + closing costs. (unless the seller covers that as well)

13% is quite a bit for us in our current position. We are continuing to speak with other banks in hopes that one will actually go through with the 80/20 bank/seller split.

We have also considered taking out a smaller personal loan to cover the 13%, but this will massively offset my debt/income ratio and bring my credit score way down - effecting the rates we will get on the bank financed portion.

There are a lot of moving parts. Does anyone have experience with a situation like this, and have any advice?

Thank you in advance,

Ian

[Matt Crusinberry]

@Account Closed, I would still consider the FHA. While you will have to pay that extra insurance (PMI), you can refinance out of that loan to a more attractive deal down the road (especially if you found a great house/deal). Also, keep in mind that once you start fixing the property up, and adding that sweat equity, your property value will go up and you may even be able to pull funding from your deal. These are just some other ideas to keep in mind while you're shopping around. Good luck!