Buy with Hard money, refinance with FHA?

[Timothy Ahn]

Hi BP!

Beginner Real Estate agent/investor in SoCal interesting in BRRR'ing single fam/multi fam, but potentially house-hacking my first investment.

Have a question about the Refinance process. Would it be possible (or prudent) to buy a property with a hard money lender, and then refinance with an FHA loan? FHA loan sounds enticing due to low interest rates/down payment, but am also hoping for cash out refi in order to have equity for another deal. Let me know what you all think! Thanks!

[Kyle J.]

Hi @Timothy Ahn. Why would you want to do this? Most people who go FHA do so to take advantage of the low down payment/interest rate, but the hard money loan is just the opposite of that. If you're going to live in the house, why pay closing costs for two loans? Just skip the hard money loan and buy with the FHA.

Besides, hard money lenders don't usually lend on owner-occupied properties, and FHA loans are only for owner-occupied properties. So it's typically one or the other.