Four Family Investment: FHA vs. Conventional

[Conor Hussey]

Hi all! I am looking to make my first real estate investment in a four-family building. I am open to living in the property, if necessary, however, would prefer not to. With that said, I am aiming to limit the total down payment with the understanding that this approach may force me to owner-occupy the property. For context on my finances, I am in my late 20's with very strong credit, healthy income/employment status, and decent cash reserves. 

I am trying to understand the difference between an FHA Loan vs. a Conventional Loan.

I understand the differences as the following:

Please let me know your thoughts on my post and any information I may have misrepresented!

If anyone has a good rule of thumb for closing costs and operating expenses for a typical property, it would be much appreciated!

Thank you in advance!

[Andrew Postell]

@Conor Hussey wow, lots to comment on here.  And this is why it's imperative to speak with a Loan Officer directly about these things - GET PREQUALIFIED!  It is a must!

1. Down Payment - To buy a 4 unit property with a conventional loan the down payment minimum is 25%.  That's a huge difference that the table does not reference.  The table is for single family homes.  
2. Work History - Conventional loans absolutely, 100% require that you are employed.And they will ask about a 2 year work history.  Not sure where you got that table but that item is absolutely incorrect.  
3. Primary vs. Investment - FHA loans do require you to live in the property....but so will conventional loans if you are wanting a "primary home" interest rate. If you are not going to occupy, then you will receive a higher interest rate.
4. 3% Down Conventional? - Now there is a 3% down conventional loan that is possible on a 4 unit property.  You'll have to occupy the property, and you'll need to have a certain income (or lower) to qualify for it.  Depending on what part of the country you are looking in the income limits change but this is something that just about any loan officer can tell you.

Hope this all makes sense.  Feel free to ask anything else if you need.  Thanks!