youtube-video-thumbnail

House Hacking with Multi-family Homes

Joel Weiser / May 26, 2022 / Expert Articles

Need a Second Opinion? Click Here for Help!

Hi, my name is Joel Wieser and I'm a loan officer in Brooklyn, New York. Today. I want to talk to you about buying a three or even a four family home and putting down only three and a half percent. House hacking. This is when you buy a primary residence, two to four units, but today I'm going to focus specifically on three or four units.

You are generating income through your primary residence. So this three and a half percent down FHA program is pretty cool. You can put on only three and a half percent versus buying an investment property and need to put down 20, or usually it's 25.

If it's an investment property, two to four unit, here you can put down only three and a half percent and usually you don't even have to have the best credit. FHA is known for helping people with low credit scores when you can still invest. Of course, if you live in one of the units taken out from your pocket, just three and a half percent which is very, very cool.

But I want to talk about three things you need to be very careful when doing this, okay. Number one, when you want to do an FHA loan on a three or four family, FHA has this thing that they call a self-sufficiency test. A self-sufficiency test just to keep it simple is they want to make sure that this house can cover with 75% of the rental value of this home.

So if there's four units, I'd say each unit brings in a thousand dollars seventy-five percent, or three quarters is $3,000. They want to make sure that the mortgage payment, the tax, the property tax and insurance on the house, your housing payment is not more than 3000. If it's 3001, you can be the strongest borrower, have an 850 score, and you're not going to be able to close on this house. But this is very, very important, this is number one.

Number two, that's called reserves. So what it says, the idea about it is as follows. The bank wants to make sure that after you close on this deal, you still have some money back in the bank, just in case you lose your job, you have something goes bad, and you'll still be able to make payments.

Once you buy a three or four unit FHA, they would want to see in your account three months in your account that's going to stay after you going to pay down payment, closing costs. So let's say you adopt the monthly housing expenses on the 3000, they want to see $9,000 being left in your account for reserves. You don't have to pay it, but you need to have it.

Number three, everybody knows that FHA allows three and a half percent down. FHA also allows for co-signers or non-active co-borrowers. However, when you have a non-active co-borrower on an FHA loan, from two units and up, they are going to increase to 75%, which means you'll have to put down 25%.

So if you don't have enough income and you need someone to help you qualify, there is some ways like if the person is a family member and is going to live in the house, then they'll usually allow it.

Have Mortgage Questions? We Can Help! Click Here

However, you need to be very careful with non-active co-borrowers. 96 and a half percent more, which is not going to be available, so, this is very important. But besides this, this is a great thing to have people, you know. Sometimes even young people, you know, they want to start investing and they want to move into their house, but they don't have the money yet. They can put up three and a half percent. It's pretty, you know, it's cool.

Again, my name is Joel Wieser and I would love to help you with that. I have a lot of experience with that. I did this for people. And you can at any time find me at the Find My Way Home network. We have other good loan officers as well, and we would love to help you. Feel free to reach out anytime.

Ask Me Your Mortgage Questions Here

Want to Schedule a Conversation?

Grab a time to talk on my calendar here!

Have Mortgage Questions? We Can Help! Click Here

My Recent Videos

joelweiser

Joel Weiser

Hi, I'm a mortgage expert living in New York. I am also licensed to help with your home loan in several other States across the Country. Do you have mortgage questions? How can I help? View Profile

Joel Weiser NMLS # 1509389 Loan Officer 7016 Fort Hamilton Pkwy Brooklyn, NY 11228 (917) 539-7704 joel.weiser@findmywayhome.com

Expert Network Questions, Comments or Feedback: support@findmywayhome.com Copyright ©2022 Fort Funding Co NMLS# 1509389. 7016 Fort Hamilton Pkwy, Brooklyn, NY 11228 (917) 539-7704. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.

FindMyWayHome.com is owned and operated by Bushwood Partners LLC, a Florida Limited Liability Corporation. The views and opinions expressed on FindMyWayHome.com are those of the authors. © 2007-2021 Find My Way Home. All Rights Reserved.

About Joel Weiser

Hi, I'm a mortgage expert living in New York. I am also licensed to help with your home loan in several other States across the Country. Do you have mortgage questions? How can I help?