Looking to move out of my first house hack and into my second...

[Dillon Heinaman]

I am currently in a duplex that I purchased in August of 22'. I ended up having to put down 15% on the place when I found out that it is standard you can't put down any less on multi-family anymore. I currently don't have any FHA loans going, here is kind of what I think I want.

4+ Bedroom 2+ Bathroom house near a University with an FHA loan (Hopefully with an ADU).

This seems to be my best house-hacking option at this point. Any advice? Would y'all go a different route? Are there lenders out there that will FHA multi-family still?

[Joshua Filkill]

Quote from @Dillon Heinaman:

I am currently in a duplex that I purchased in August of 22'. I ended up having to put down 15% on the place when I found out that it is standard you can't put down any less on multi-family anymore. I currently don't have any FHA loans going, here is kind of what I think I want.

4+ Bedroom 2+ Bathroom house near a University with an FHA loan (Hopefully with an ADU).

This seems to be my best house-hacking option at this point. Any advice? Would y'all go a different route? Are there lenders out there that will FHA multi-family still?

 I typically recommend going for as many units as you can to make the most of the low down payment, this would be up to 4 units to keep it residential. This can depend on price points in your market, your comfortability to manage up to 4 units or ability to find a good PM or limitations in multifamily in areas of your market that you'd want to live in. Many people still do the rent by the room strategy and have success, which I assume is what you were implying that you'd do. 

Talk to lenders in your area about low down payment programs that they may offer, but to answer your question yes you can use an FHA loan for up to 4 units. Just remember to calculate the numbers for when you move out to make sure buying a SF vs. a multi family makes sense.

[Chris Davidson]

@Dillon Heinaman lenders are still doing FHA on small multi's but there is the self sufficiency test it must pass. Depending on your market and how rates are looking this may not be realistic.

I would work on your strategy and see what fits you best long term. A college rental may make numbers work day one better, but if you aren't wanting to do student rentals long term it doesn't make sense. I would plan out a path and see what is going to help you get there the fastest.

Best of luck! 

[Tanner Pile]

@Dillon Heinaman I would look to go for as many units as possible. You can still do FHA loans on small multi-family. One thing I learned is if you have a co-signer on the loan you can only do FHA if they will live in the property. This can be tricky if you need the co-signer to get the higher purchase price but you will need to do 15% down if they will not live in the multi-family unit.

[Ben Einspahr]

@Dillon Heinaman There are definitely some pro's and con's when using an FHA loan that I will not dive into. Just know that traditional conventional 30 year fix are still a great option. Also look into the 2/1 buy down.

I would second your investing criteria but with a few edits. 4+ bed home with 2200 or greater sqft. Higher inventory than mult's. You will typically be able to add additional rooms for very low cost. Rent by the room. Would not get caught up on the ADU.

What is your business plan after moving out? Depending on city rules and regs, you can not rent out ADU separately for main portion of the home unless it is your primary. Keep in mind that the numbers after moving out are more important then while living here.

[Lawrence Potts]

Quote from @Dillon Heinaman:

I am currently in a duplex that I purchased in August of 22'. I ended up having to put down 15% on the place when I found out that it is standard you can't put down any less on multi-family anymore. I currently don't have any FHA loans going, here is kind of what I think I want.

4+ Bedroom 2+ Bathroom house near a University with an FHA loan (Hopefully with an ADU).

This seems to be my best house-hacking option at this point. Any advice? Would y'all go a different route? Are there lenders out there that will FHA multi-family still?

That's interesting that you couldn't use an FHA loan on the duplex. Typically that is the only loan product you can use if you're a first time home buyer looking to buy a multifamily property. 3.5% down. The self sufficiency test usually only needed on triplexes and 4plexes but it could differ depending on the location. But I do find it odd that you couldn't use FHA (unless you already bought a home). Only changes FHA has made is that your seasoning period changed to 12 months, as far as I know.

You can still FHA, however, FHA a multifamily right now for your situation may be difficult. FHA was designed for first time home buyers with lower incomes. They do not want their product to become an investment product. If they see you are currently living in and own a duplex, they may not lend to you if you are trying to buy your second home as a triplex. Talking to a lender about this is very important in order to identify your next step. It highly depends on your situation and how underwriters will view it, not so much lending as a whole.

I think looking for a property with an ADU is a great route to go. There are lenders that are coming up with products specifically with ADU's . I'd connect with @Grant Schroeder, his company can get you connected to a local lender and agent. I recommend looking at your local municipality's rules for ADU's. Some cities/counties are allowing for conversions to meet low housing inventory needs, but they'll have requirements for size, location, etc. Something to consider. Make sure that if you're looking at a property with an existing ADU that it is properly permitted!

Hope that helps!

[Ryan Thomson]

@Dillon Heinaman you had to put 15% down on the duplex bc you probably bought it with a conventional loan. If you buy a duplex with FHA you only have to put 3.5-5% down. I would buy a duplex with 5% down. There is no self sufficiency test on a duplex The self sufficiency challenge becomes a thing with triplex or quadplex.

I also like the SFH in a University area as well!