All Forum Posts by: Michael Cohen

@Dewayne Murray - Yes; FHA loans have the expectation you live in the property as an owner-occupied primary residence for one year. There are some exceptions and caveats of course, but for the most part, it's a 1-year time frame.

The idea of "house hacking" is that you utilize an FHA loan (which allows for the purchase of 1 to 4 units) to purchase a duplex, triplex, or quad. You live in one unit (so it's owner-occupied) and then rent out the remaining units. This way your net mortgage expense is somewhere between dramatically reduced and eliminated.

Hi @Dewayne Murray . I grew up in Kendall.

The 97 conventional is a loan type. It's a conventional loan (i.e. rules/guidelines set forth by Freddie Mac and/or FannieMae) and is a 97LTV product. One of the guidelines is that the property must be a single-unit owner-occupied primary residence. 97LTV products are for single units so you can't "house hack" them.

A "first time homebuyers program" is a catch-all phrase for any program (loan type, state grant, lender program, etc.) that is designed for first time home buyers.

Think of it as overlapping circles.

To house hack, you want an FHA loan which is a 3.5% down payment option. (Therefore it's a 96.5%LTV product)

Hi @Ethan Cole - welcome to BP!  The first BP podcast talks about this very topic, so you may want to revisit it.  In short, a great way is to find someone already successful at RE investing in your area (via BP) and trade something of value: your time, sweat equity, money, bringing a deal to their attention, etc. in exchange for learning from them.

Down payment funds, whether you're looking for an investment property or owner-occupied FHA loan, cannot be a loan. The funds must be yours and non-repayable. Those funds can come from a few different sources: checking/savings, borrowing against retirement, city/county/state grant, church, family, etc. but each cannot have the expectation of being paid back.

I would like to chime in: there is no single "FICO" score. Each of the three major credit bureaus (TransUnion, Equifax, and Experian) have multiple algorithms that analyze a credit profile and then assign a numerical value. According to Bankrate:

Currently, Experian and Equifax each provide 16 different FICO credit scores to lenders: five iterations of the general risk score and up to three generations of the five industry scores. TransUnion provides 21 different FICO credit scores to lenders, six versions of the general score and up to four generations of the industry scores.

Some older FICO scores are available only to lenders who have an existing relationship with the credit bureau. New clients (lenders) aren't offered the oldest scores.

This brings the final tally to 53 FICO credit scores. However, FICO 9 will eventually add 12 more scores to the count: a new general risk score per bureau plus a new mortgage, auto and credit card industry score for each.

So anything you check (Credit Karma, Discover, FreeAnnualCreditReport.org, etc.) should be used as a guide only and not as absolute gospel as to what your "credit score" will be with your lender.

Hi @Raina B. - I just read your reply. Sounds like the bank you went to has overlays. FHA guidelines allow for up to 4 units, but the bank made the decision to be even more strict with their lending and choose to restrict loans to duplex.

Find another lender. PM your info and I'd be happy to find someone for you in your area.

I know of no new rule about this. Lender overlay, perhaps.

FHA guidelines do allow for the purchase of 1-4 unit properties, provided at least one of the units is used as an owner-occupied primary residence.

The first lender has overlays, which is the lending institution adding additional requirements on top of guidelines. So while FHA allows for 3 and 4 units, that particular lender chooses not to.

PM me your contact info and I'll get you the names of some lenders out there.

@Daniel Gonzalez Yes, they're the same thing. It's having the underwriter review, and approve, you as a buyer before there is even a subject property lined up.