Using the BP rental calculator - FHA

[Alexander Storer]

I'm currently looking to purchase a multi-unit property (owner-occupied) financed by FHA and have been using the BP calculator. In using this calculator, is it correct to analyze the deals I'm looking at as if I was going to put the entire 20% down? Or should I still be analyzing deals with 3.5% down? It seems as if I use the 3.5% down rule It will be near impossible to cash flow and I will be at a disadvantage to other buyers who have 20% to put down. As clarification, I include the 'rent' that I would 'pay' myself in the analysis to see if it cash flows / it's a good deal.

[Stephanie Cabral]

Hi @Alexander Storer, I'm not familiar with standard FHA loans but I've done a few FHA 203k loans (where you can take the purchase price, rehab, and some closing costs into one low interest rate loan) and have put 3.5% down on the total value of the loan. This loan is an incredible tool because it allows you to purchase a property that needs work, which usually translates into a better deal if you buy right, eliminates the requirement that you were a landlord for 2 years, gives you a low rate, and in my opinion, the best part is that you gain renovation experience with a consultant that's on your side. The negative, you will pay the PMI for the full life of the loan unless you refinance out and then you can look back and say that you did a BRRRR with your first property!