Moving from SFH to Multifamily Residential using FHA

[David Mendez]

My wife and I bought our SFH 5 years ago using an FHA loan. Bought it for 56k; paid off student loan and car debt. Now we are wanting to house hack. I've read that you can only have one FHA loan at a time but there are a few exceptions (specifically around job re-location). We would like to buy and move to a quad within our local area but I don't believe we can buy it with an FHA loan since we already have one for our current primary residence. From what I've read, my only solution is to pay off my current FHA loan which is about 38k left so I can request a new FHA loan for the quad. But if I do that, then I won't have the money for the 3.5% down payment.

Here are my numbers:

Savings: 41k

Remaining balance on FHA loan: 38k

Interest Rate on FHA loan: 2.75%

Market Value of Current Residence: 100k

Asking Price range for quads we're willing to live in: 350k-450k (12.25k - 15.75k at 3.5% down)

My current thought is to cash out refinance to a conventional loan. I don't mind too much losing a few thousand dollars on closing costs. Another option I have is to wait until I save up enough so I can pay the remaining balance on my loan and have enough for a 3.5% downpayment. That will take about another 4 months. I would like to know if there are other options. Note that I am considering on selling my primary residence after moving to the quad. Cash flow would be good if I rent out my current property but I can get better ROI using that money to buy another duplex/quad using a conventional loan.