FHA tough love-- Do I need FHA?

[Keeya WangJones]

Hi, Seeking advice on financing my first deal. My lender approve me at $900k for Quadplex. But quadplex deals in San Diego in a nice area is extremely hard to find. We visit Talmadge yesterday and found a single family house at $700k. It has a 2 car garage converted into a jr 1 bedroom unit. It even hand enough land to still have a yard and add a studio loft. I tell my lender and found out under FHA the loan has a limit of $580k. She suggested I can take out a second mortgage to try and cover the rest. Stats: $60k down FHA 5% down but at $700k - 60k down 8.5% Since it was in a perfect area of Talmadge close to SDSU, we wanted to put in an offer. But hearing about two mortgages seems drastic and not safe. Higher interest, drops of desperation. AND property is already under contract. Excellent credit, $60k, motivated, 6 figure salary.. My wife and I walked around Talmadge and a lot of homes have converted garages into units. Smart! What would you do? How do I make San Diego work? Cheers!