Hello all. This is my first post on Bigger Pockets as I get going into my real estate journey. I'm currently in the market to purchase my first home (currently in an apartment). I'm looking to acquire my first BRRR. I'm a firefighter, and a family member recently showed me a "First responder loan" offered by a local credit union. I wanted to see if I could get some input on it since I had assumed a 30-year fixed would be the way to go. I posted the loan details from the CU's website below.

Are there any pros or cons when looking to pull out equity in a year or so to go on to the next project? It seems the initial APR may be lower than fixed, is that correct? The major pros that I note is a 1% downpayment with no PMI. any insight would be greatly appreciated.

Summary: Portfolio product with 1% minimum down payment and no PMI requirement designed to benefit those heroes who serve and protect our communities. Financing provided through this program is only available for properties located in Michigan or Florida.

Available Product Type: SOFR 7/6 ARM, SOFR 10/6 ARM

Loan Amount: $766,550 Maximum

LTV: Purchase and No Cash Out Refinance - Maximum 99%

Prepayment Penalty: None

Loan Assumption: None

Eligible Properties: 1-unit dwellings, attached and detached condominiums, PUDs

Escrow: An escrow account must be established for property taxes, and flood insurance, if required

Underwriting

No Private Mortgage Insurance
Occupancy – Primary residences
Minimum Credit Score - 700
DTI – Max 43% (UW/Mgmt exceptions up to 50% with minimum 3 documented compensating factors)
Student Loans – If in deferment, no qualifying payment required
Down payment of 1% must be borrower’s own funds, while closing costs and prepaids may be gift funds
Attached condominiums require a 10% down payment
Eligible Borrowers – Protect and serve heroes are defined as employees of public or private education institutions, employees of medical and healthcare organizations, all first responders, and active or former military personnel.

Servicing: Retained

Detroit, Michigan

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