Utilize FHA or Conventional Loan

[Garrett Ayers]

Should I utilize an FHA loan on my first home purchase or use a conventional loan? I would be purchasing with the intent to rent it out after a year of living as the contract will require. Is an FHA a good investment loan strategy if it is available?

[Albert Bui]

Quote from @Garrett Ayers:

Should I utilize an FHA loan on my first home purchase or use a conventional loan? I would be purchasing with the intent to rent it out after a year of living as the contract will require. Is an FHA a good investment loan strategy if it is available?

It depends on your goals garrett you may want to keep FHA around for your 2-4 unit house hack purchases because often times conventional can only do low down payment for 1 unit properties but when it comes to 2-4 units the conventional regular program is 15-20% down even if its owner occupied.

So as with any answer life or planning, it depends right? whether the question is about taxes, financial planning, mortgage planning, etc.

If you're buying a 1 unit property you may want to pick the one that makes the most sense financially, payment wise, cost wise (FHA has upfront and monthly MI while conventional might be less expensive depending on your fico scores or down payment you have available).

What if you wanted to buy 2-4 unit house hacks in the future? Then you might preserve your FHA so you can move out of this property today to do that later on.

Sure you can always refinance your FHA to conventional and reuse your FHA again but that happened to folks in 2021 and they got such a low FHA rate in the 2's that now they dont wnat to refinance @Matthew Kwan so they dont want to refinance their FHA any more. No one could have predicted this scenario that rates would go up so much in 2022-2023 so we always have to have multiple plans just incase. This is why mortgage planning is so important.

@Carlos Valencia