Hey BP,

Long time podcast listener and forum reader, but first time poster. I have learned so much through BP already, and look forward to learning more through engaging with the community here.

I am seeking some guidance on my next move. I currently own my primary (SFH) and my short term goal is to acquire a second buy-and-hold property in my current market (I am in CT). I am looking for a single family or small multi (though most multis in my market seem to be selling all-cash, over asking, according to my realtor, and I cannot compete with that).

I purchased my SFH through a state offered first-time homebuyers program with 5% down, and have experienced some appreciation that should allow me to get to ~15-20% equity if I were to refinance. Current mortgage rate is 3.375% (with PMI on top of that), but my broker tells me (and research is supporting) that refinance rates are up near 4%. My broker has also told me that I would be able to qualify for FHA, despite the fact that I used another first-time homebuyer program already, which I view as a great opportunity for acquisition. The catch is that my current mortgage does not let me move out of the home and use it as a rental.

So, the way I see it, I have two realistic options in pursuing my next property.

1. Stay put and continue to save until I have enough cash for a 20% down payment for a second property with conventional financing.
2. Refinance out of my current mortgage, absorb the higher rate, obtain an FHA financed property and move into the new property to satisfy occupancy requirement. (With the higher refinance rate on my current primary, I should still be cash flow positive after expenses including vacancy, cap ex, etc.)

I feel like I would be missing an opportunity to not take advantage of the FHA program, but part of me also thinks I would be foolish to give up such a low interest rate on my current primary.

I think it would take me at least another couple of years to save up the cash for a conventional 20% down payment, but the impatient side of me does not want to lose that investing time while I still have the lifestyle flexibility to easily move to a new place.

Am I making too big a deal of the higher interest rate, if my rents can support it? Are there conventional mortgages out there with lower down payments (5%-10%) and no occupancy requirements that I should be searching harder to find? 

Any feedback on other things I should consider in my next step would be greatly appreciated!