Is it possible to house hack in Orange County CA?

[Jimmy Cooper]

Hey BP Crew! I am a 33 year old sub contractor, I have a young family wife and two kids (two under two). 

Just wondering if it is possible to house hack in Orange County California, without a down payment over $200,000.

Looking for tips, tricks, and advise in this area, Thanks!

[Sasha Mohammed]

hi @Jimmy Cooper

yes! its possible! I just purchased in Sept of 2021 and am doing a house hack, although mine will look very different than yours (i only have one 4-legged mouth to feed and have piled in room mates to pay most of my mortgage for me). 

For starters, you'll want to track fannie/freddie loan limits in OC. This changes every year. They just announced 2023 loan limits; for Orange County specifically, it's looking like $1,073,000. This means you are not considered "jumbo" if your LOAN size does not exceed this number, and you are not forced to put 20% down. There are even some jumbo loans that were (at least as of 6 months ago) allowing for less than 20% down, but they're tougher to find in this market. At the time (sept 2021) i purchased, mine was jumbo, i got away with 10.1% down. 

Conventional / High balance will allow for as little as 5% down (again, so long as you're not in "jumbo" territory). this will give you a lot easier barrier to entry, but it's all a trade off -- your rate will be higher with less down, as will your payments, and you will have mortgage insurance. 

Sounds like your intent is to buy something with a live-in value-add (correct me if i'm wrong) and do the work yourself while you live there. For this reason, i would suggest you stay away from FHA financing as the loan type itself is much more stringent on property condition. it is feasible to make this work, as long as you're not looking at something needing substantial renovation, but i have seen issues with chipping paint (just one example) which FHA is not cool with.

FHA is a good option if you're looking for multi-family, as it offers the lowest down payment options - 3.5% down all the way up to 4 units HOWEVER, you'll have extra guidelines for 3-and-4 unit properties that might force larger downs. For further research on this - google: "FHA multifamily self-sustainability".

There are some other loan programs that might be a good fit for you, Freddie's Choice Renovation loan might be something to look into. I wish i had extensive knowledge on this program to give you some insight, but for now, add it to your list of stuff to research :)

Prices are high, rates are high, but don't get discouraged! There are definitely deals to be found, even in Orange County! 

Best of luck to you!