FHA 5% or Conventional 5% MF

[Ruben Cervantes]

Hello BP members I’m in the process of purchasing a 4 unit MF property in CA with a owner occupied FHA loan at 3.5% dp, but we just encountered a problem. Long story short the property did not meet the FHA self sufficiency test. We have pulled comps for rents/property management to adjust but we are still a bit short. The broker I’m working with mentioned only options I have is to go 5% downpayment with FHA or Conventional downpayment 5%. He’s stating I go for FHA because it’ll be cheaper than conventional plus we already did an FHA appraisal and we would have to resubmit items if we choose Conventional. But I’m arguing what’s the point of an FHA loan if I can’t get in at 3.5$ dp. Also wouldn’t it be more beneficial to go Conventional in this situation since there’s only PMI till I reach 80% equity and no UFMIP vs fha which is for the life of the loan. Also I read that financing a Conventional loan is cheaper. Side note I had planned to househack for 1 yr and refi out with Conventional and owner occupy another FHA MF. Any help is appreciated thanks