Loan Option Advice for House Hack in Alexandria VA

[David Cherkowsky]

Hi All,

I am purchasing a home to house hack in Alexandria VA. I have two loan options, and I am interested to hear thoughts between the two. They are very different, which is making me struggle with comparing them. Purchase price of the home is $800k.

Option 1

Conventional loan

20% down: $160k

Points: 0

Cash to close: $170,092

Rate: 6.875%

PMI: $0

PITI: $5004

Loan Amount: $640k

Option 2

FHA loan

10.625% down: $85k

Points: 2.5

Cash to close: $120,455

PMI: $296.30

PITI + PMI: $5,537

Loan Amount: $715k

With option one, I am bringing ~$50k more to the table, but my monthly payment is $500 less and my loan amount is $75k less. I imagine this will help me with a refinance in the future. I imagine refinancing option 2 would be more difficult due to the higher LTV. However, I do like the idea of bringing less cash to the table.

Any thoughts between these two options? Is one a clear choice and I am having trouble seeing it?

Thank you.

[Lexie De Stefano]

I like this train of thought and think you should aim for option 3: conventional loan + lower downpayment (perhaps even lower than 10%). Your lender definitely should be able to count the 75%- I'm in Arlington and would be happy to connect you with my awesome lender who has been able to do all kinds of creative options to get to yes for me. For context, downtown Alexandria performs super well as a rental market and bringing in $5.5k+ as the monthly rental income if you choose to move out of the househack in the future will be absolutely feasible (depending on the property of course). Therefore, bringing as little to the table as possible at closing in both the downpayment + closing costs should hopefully still make your numbers work. Best of luck!