All Forum Posts by: Tyler Austin

To add to what was already said, you will be paying MIP (it's FHA's version of PMI) with less than 20% down. Read this part carefully....MIP never goes away with FHA loan. Not when you're at 20% equity, never. On a conventional loan (at least 5% down) you can possibly lose the PMI by getting an appraisal when you have 20% equity. In order to get rid of MIP, you will have to refinance into a conventional loan at some point in time. I bought my duplex with FHA (3.5% down @ 3.75% interest). With my great interest rate, it was absolutely worth it. I could have put more down, but I held back more down payment in order to do the next deal quicker. Also, if you want to move out of your duplex in the future, and you refinance into a conventional loan, that frees up your FHA loan to use all over again on a live in residence.

Also, many say house hacking is great to "live for free". I did not live for free. However, the tenants did pay about 65% of my PITI & MIP, and that was about $500 cheaper out of pocket per month than I was paying in rent. So, even if you still have out of pocket expenses on mortgage, house hacking is still a fantastic way to get started in real estate investments.

To add to what was already said, you will be paying MIP (it's FHA's version of PMI) with less than 20% down. Read this part carefully....MIP never goes away with FHA loan. Not when you're at 20% equity, never. On a conventional loan (at least 5% down) you can possibly lose the PMI by getting an appraisal when you have 20% equity. In order to get rid of MIP, you will have to refinance into a conventional loan at some point in time. I bought my duplex with FHA (3.5% down @ 3.75% interest). With my great interest rate, it was absolutely worth it. I could have put more down, but I held back more down payment in order to do the next deal quicker. Also, if you want to move out of your duplex in the future, and you refinance into a conventional loan, that frees up your FHA loan to use all over again on a live in residence.

Also, many say house hacking is great to "live for free". I did not live for free. However, the tenants did pay about 65% of my PITI & MIP, and that was about $500 cheaper out of pocket per month than I was paying in rent. So, even if you still have out of pocket expenses on mortgage, house hacking is still a fantastic way to get started in real estate investments.

@Tyler Austin, I’m always happy to help another Tyler!  What’s bringing you to Dallas?

A couple of considerations:

- FHA is not just for first time homebuyers. Minimum down payment is 3.5%

- Conv has some low down payment options as well, and with good credit it may be a better option than FHA

- Specifically a 5% down HomePossible is a great Conv for Multifamily 2-4 unit primary residences (3% down for single family)

- You mention having no cash, you definitely will need some cash for down payment, closing costs, and personally for reserves. You can get gift funds from a family member to help you qualify 

- I always recommend using a low down payment option for any owner occupied purchase. The opportunity cost of capital for 20% significantly outweighs the cost of the mortgage insurance required on lesser down payment loan options. Plus you can refi later if your home appreciates to get rid of the mortgage insurance. 

Let’s grab a coffee or lunch when you make it to DFW! 

@Tyler Austin my first duplex was an owner occupied duplex purchased with an FHA loan.

It's a great way to get started and I recommend it to anyone looking to get started! The down payment really is 3.5% and it will have PMI but it doesn't matter if the tenants are paying the bill.