Wanting to house hack in SLC, Utah

[Lexi Bentson]

My husband and I are currently renting in the cottonwood heights area in SLC. We have been saving for a while to try and buy a house. We recently stumbled on FI and we want to house hack. Buying a multi family property or a house with potential to rent out the basement is our goal. I have only begun to call around to get pre qualified by lenders. Most of them say getting an FHA with a very small down payment for a multi family isn't possible. I was wondering if it is possible to get a 3.5% fha down payment for a multi family?
We are first time buyers, both with credit scores > 740, no dept other than mostly travel hacking credit card payments that we can easily pay off. We are both full time W2 employees. 

[Cherie Orellana]

@Lexi Bentson 

That’s awesome! Cottonwood heights is a great area to live. 

There are pockets of Salt Lake county that are single family but allow other uses such as 2 family. Something like this might be beneficial in your circumstances.  

I am not sure how detailed the lenders went into it with you.  You can typically get a multi family conventional owner occupied loan with as little as 15% down. 

When it comes to FHA and Multi Family you can finance a duplex fairly easily with the 3.5% down. Once you move into a triplex or four Plex they use some sort of formula based on the rents and the property that can make it difficult to qualify most multi units under FHA guidelines.

Your best bet would be looking for a duplex and financing it FHA owner occupied with 3.5% down. Or looking for a single-family with a mother-in-law or something you could convert to work for your house-hacking goals.

That being said it is not impossible to get an FHA loan on a triplex or four Plex. It would just depend entirely on the specific property, and most in the area don't pass the formula used to qualify them.

One last thought is I have heard of times that someone can get a multi unit financed if they qualify with lower income for homeready / home possible loans with 3% down. You would qualify by using the rents to increase income above the lower income restriction for the program.