First House Hack Loan Options

[Nick Vogel]

Hello all! I am looking to purchase my first small multifamily property through house hacking. I am looking at two different loan options for an owner-occupied property. The first being a 3.5% down FHA loan. The second is a 5% down, 5-year ARM with no PMI. Both are 30-year loans. I am curious what loan option I should pursue? What are the pros and cons of both? I have a good understanding of both loans; I am just looking for others' input. Please let me know if you have any questions. Thank you for your input!

[Nick Vogel]

@Dave Skow Thank you for your reply. The ARM is 6.625% and the FHA I am not 100% sure about yet. Waiting to hear back. I agree with your con on the FHA with the expensive UFMIP which makes the payment higher than it needs to be. I would be able to handle to slightly higher down payment on the 5% down loan. However, with the adjustable rate, I would have to refi within five years. But if rates go down in the next couple of years, which I believe is very possible, a refinance would be almost certain anyways. I do not specifically know the answers to your questions, but I believe it the loan is a in house product, so it may be lender paid mtg ins. But I can ask to see how the interest rate is affected if I had to pay the PMI. Thank you for your help!