Should I use an FHA loan or should I wait and save more ?

[Stendjy Clerveau]

Hello everyone,

I'm exploring the possibility of purchasing my first property with the intention of flipping it, and I'd appreciate your insights. I'm strongly considering an FHA loan since my cash reserves are currently limited. I've recently paid off some debt and am earning a decent income, but my savings are still modest and not yet substantial.

My plan is to use an FHA loan to acquire a decent property, claim it as my primary residence for a year, and then either sell it for a profit or potentially rent it out. I have a few questions about this approach:

1. Is it a viable strategy to use an FHA loan for a flip, given the requirement to live in the property for at least a year? Are there any pitfalls I should be aware of?

2. Can FHA loans be used to purchase properties needing significant renovations, or are they limited to homes in good condition? I'd like to understand the scope of repairs allowed under this financing option.

3. If an FHA loan isn't ideal, I'm open to alternatives like a hard money loan. However, I'm concerned about the proof of capital requirement—would this typically demand a large amount of cash on hand, and if so, how much is generally expected?

I’m eager to hear your advice and experiences, especially from those who’ve financed similar projects. Any guidance on navigating these options as a first-time investor would be greatly appreciated!