First Buy and Hold Financing

[Brunno Goncalves]

I have been trying to purchase a 3 family in the Metro West area of MA. I have been approved by FHA and it has been very tough to get something as my finance is not giving me the any advantage on the houses I'm trying to place offers on. I can do as much as 5% down but that would be about it.

Does anyone know another way to get finance with 5% down on a 3 Family in MA?

Thanks in advance.

[Charlie MacPherson]

Sure - you're talking about the appraisal for "safety" in addition to the amount financed.

If the property has issues that would cause it to fail FHA (also VA and USDA), then I can see why a seller would refuse your offer.

If there are no such issues, I don't know why a seller would not accept your offer.

Your options are:

- FHA 203K construction loan. It's a lengthy and somewhat more expensive and complicated process. You have to pay for a HUD project manager, get multiple bids, etc. Fannie Mae has a construction loan called "HomeStyle" that you could look into.

- If it's minor work, like a pain touch-up, get the seller to take care of it - or get the seller's agreement to let you do it yourself.  The risk is that if the deal bows up, you won't be able to recoup the time and money you spent.  I heard of a case where a buyer put a new roof on a home before the sale.  The deal fell apart and the seller was more than happy to have a new roof on his home.  I'll bet he raised the sale price accordingly.

- Find another property that will pass FHA.

- Find another loan program.  Talk with a good mortgage broker to see what options they have.