Looking to purchase second owner-occupied duplex

[Justin H.]

Hi there! This site has helped me tremendously as I've embarked on becoming a landlord. Several years ago I purchased a small duplex in a good neighborhood in Sacramento. I live in one side and rent out the other. It's gone really well — I bought with an FHA and was able to refi into a conventional (no more PMI, yay!) earlier this Spring because of the amount it's gone up in value and my LTV ratio. If I were to leave and rent out my space, I would make at least $600/month because of how hot the rental market is, how low my mortgage is now, and how little inventory exists in my region.

Since I'm now eligible for another FHA loan, I was wondering if it would make sense to purchase another and move into it. Can I use the equity in my current house as a down payment? If so, would that be done through a cash out refi or another mechanism?

Things in my favor: I have a steady (and good paying) job, good credit, the appraised value on my home is high, interest rates are still low, rent is high. Things I'm concerned about: the price of homes in my market is high and worried about a downturn (though I plan to keep these rentals for the long term), I'm not sure what financing tools are available to me.

Any help is much appreciated! I'm doing this on my own and am proud of what I've been able to do so far — you all have been so helpful in this journey.