Is putting 3% down or traditional 20 % as downpayment better :- ? Need Advice

[Sidd Chitnis]

BP family: If money for downpayment is not a problem what would be sane thing to do in this interest rate environment ? Is putting less down and holding onto your cash now for a refi- later when the interest rates come down a good idea?

I am trying to buy a condo and was thinking of going the FHA route with 3% down but that also means i would end up paying more interest at the end of my term. The value of the property i am looking at is around 550K

Thank you and appreciate everyone's help.

[Matthew Kwan]

Hi Sidd, it really depends on what your long term goal on investing real estate. You want to invest just to have a place to live and potentially offsetting your mortgage payment by renting out the vacated rooms or having x amount of cashflow in the future? In this case, I would recommend staying away from condo as they have high HOA fees and tends to increases every year. Also for condos, you only own the unit but no the actual land itself. You should always looking into single family houses or multifamily, as there is an actual land that you own and potentially build ADU/DADU in the foreseeable future.

Also, the beauty of FHA is that it allows you to put 3.5% down payment to invest in 1-4 units. However if you plan on buying 3-4units, there is a trigger rule for FHA, it is called the self sufficiency test. In order to past this SS test, your market gross rental income at 75% has to be more/equal to your monthly mortgage payment (PITIA). These are something to be considered. Feel free to DM and we can talk more about it @Carlos Valencia @Albert Bui