The minimum amount of the down payment required for a conventional loan is 5% (we got one last year) and since its less than 20% you would have to pay PMI. One difference is that with conventional loans the PMI goes away (with a call or maybe a wand) after you pay down 20-25%, whereas FHA you pay the PMI or MIP until the loan is paid off.
+Andrew Shepherd Excellent point. As I watched this video, I was also thinking about 5% conventionals available, especially since I'm planning on using one for my first real estate investment. Another thing to keep in mind with PMI with conventional loans is that it can vary highly based on your credit, unlike FHA loans. I've seen an example where the difference between scores of 720 something and 740 something was almost double.
BigD Travels There are federal subsidy programs available at the local level for down payment assistance for up to 20k for first time home buyers. The Fed gives money away, but most people don't know it. It's not heavily advertised.
Exactly. I was about to sing a 3.5 FHA loan when my lender stopped me and said we gonna go conventional with 3% no PMI. Same down payment more money in my pocket every month. Idc about the rates.
Love the FHA products! I just purchased a foreclosure using FHA 203k loan, renovated, refinanced and pulled all our money out plus some. We will use that money to purchase our next rental
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Nice video how does does PMI or MIP fall off after 78% or do you have to wait 11 years to get rid of PMI also could you just get rid of the PMI if you refinance to a conventional
@BiggerPockets You'd use the FHA and use the extra money to acquire another property, but you'd have to live in it for a year? How would that work for a rental property???
I'm 19 years old no work history, because I saw that to qualify for an FHA loan you need 2 years of work, am I totally out of the game for the FHA loan? or is there another way around it? Great video btw!
I don't fully understand the comment about "getting another property" - if he is a first time buyer is his leverage not calculated using his income? Isn't that statement assuming that he has an income that allows multiple mortgages? especially if FHA is a higher monthly cost. Any clarifying thoughts appreciated.
What about a fixer upper ? I have a similar situation,i have 40k in the bank buying a 140k fixer upper. Would you recommend getting a 203k loan or spending my own money to fix it?
Good Chanel and good information! I'm a huge fan!What if I already purchase a home (florida)with a FHA loan and now I want to get a second property. Can I put my primary home in a LLC rent it out and get a FHA loan for my second home?
I love BiggerPockets, I tell anyone who's interested in real estate to check you guys out. My friend and I are looking to purchase a first house, but we'd ideally like to rent some of it out. There's an 8 plex in my area for sale for 175K, that is in liveable condition and brings in about 2K in rent a month. Would you consider getting a bigger loan to upgrade your units, and to possibly cover any unexpected costs that'll happen in the first few years? #AskBP I'm trying to look for my answer on my own by searching loan on your guys videos. Thanks for the fabulous work you guys do. I notice there isn't any ads on this video, you guys should apply for youtube partnership.
Jaron Pope PMI has been tax deductible since Jan 1, 2007. It was supposed to end in 2014 but they extended it through 2015. There are income limitations. Single person $59,000 ? Married filing jointly AGI $109,000.
Here is you a question what should someone who is 100% disabled do say they want $50,000 for the property and they have no money for a downpayment and I get around $700 a month and disability but they always pay their rent first always but want to buy their own place any suggestions?
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I have a situation i'd love your input on. I make 50k a year and my monthly bills are around $300 That being said I currently save atleast $2000 a month and i am currently at $7000 in my savings. I am 22 and aiming for $80,000 for my first home, I'm torn between saving up 20% and using a conventional loan or using a FHA 203k loan and doing renovations for a few years and then moving up in the market via selling and buying a larger home. Which option is more wise in your opinion? Saving the 20% and staying in the home until i own it outright or using the FHA 203k to not tie up all of my savings and profit from the renovations?
I say use an FHA loan for a multi family you can put like 25-30k down possibly less also including closing costs and you’ll be able to have tenants pay it off for you while saving more and gaining potential cash flow right off the bat whether its $100 or $150 cash flow while saving towards a second property. And in a year or so you can use what you saved and or use a HELOC towards your second home. You’re in a great position, brainstorm and take action keep us updated. It’s been five months but I’m curious as to where you currently are if you’ve made a move or not
Hi Angus, I hope the savings scheme is still working as well for you. In your situation I would probably recommend the conventional. You will have a low mortgage payment and you will still be easily able to save money and progressively work on renovations. I'm assuming you're single and don't have many other bills but you may want to also stash a few thousand dollars as an emergency fund just so you aren't depleted when you buy your home. The FHA program, while flexible, will cause your mortgage to be higher IN ADDITION TO the PMI you will need to pay. If you're planning on living there for a few years, you WILL end up paying the difference you initially saved. It also may not be a good idea to take on reno ambitions so early on in your home ownership experience, unless you grew up with a parent who was a contractor or else personally know someone who is experienced in flips very well. You will have plenty of time to build your savings back up with the monthly cost savings of a conventional, and you will probably make more disciplined decisions regarding remodeling as a result. In other words, you won't be tempted by a $15-20k pile of cash, eyeing stainless steel appliances and granite counter tops. Some renos will actually not do much to raise the value of your home, but that also depends on location and mere timing of the market. Hope this helps. Best of luck!
I'm 23 years old and I've got 8k in savings and I'm pre qualified for a 150k fha loan. My plan was to still live at home and buy a single family house and rent it out , or if I could find a multifamily house or a duplex I would consider house hacking . What do you guys think my best option would be .
can 203k be used to rehab a multi family home if I plan to live there? How soon can I refinance the home after it is rehabbed and has equity? Does this loan carry a high interest rate after the rehab period is over?
Mail him on martinezraber@gmail.com or moore_hack on instagram +12013507159 via WhatsApp (he does not take upfront payment) if you need help about forex trading Bitcoin hacking your PayPalcredit score fix bank account phone hack (cheating husband or wife ) western union hack money gram credit card hack instagram verification facebook and many more.. His fast , legit and reliable
You are required to live in your home for at least 1 year with an fha. The duplex comment was just an option. You can use an fha for single family. (As long as you live there for st least a year)
Just because you can’t use an FHA loan on a rental property doesn’t necessarily mean that you can’t rent it out and make money from it. You can get a Single family home and live in one room and rent out the other rooms to friends or college students. You can also find a property with a basement and finish the basement with a bathroom and kitchen and make it into a studio then rent out the house and you still live there. You have tenants paying your rent and possibly your bills. House hack doesn’t always mean multi family. If you DO NOT plan on living on the property then FHA is a no go for you. I believe you can use FHA loan and after you pay off at least 20% of the loan you can refinance into a conventional loan and move out to either do another FHA loan or conventional.
Somebody! Would Somebody, who knows about FHA, Owner Occupied or 203K or USDA loans, please help me!!!! I already have a house. Living in it for 40 years! But never quite had enough money to finally finish remodeling it! Since I already own my house and I'm 3 months away from paying off my Heloc, what is the best loan for me? I want to rent out 3 bedrooms in my house and still live here. Can I get a 203K loan? Can I get a USDA loan for a loan on the house as well as repairs? I live 20 minutes out of town in upstate New York. What's the best loan for me and can I qualify? I want to turn my garage into a rec room and heat and remodel my sun room porch so it can be a bed room/TV room. Will my situation qualify for these loans IF I already own my house? I want to rent out 2 or 3 rooms and still live here.
This is completely false. My monthly net income is around $3,500. I have ZERO debt because I just put $8,000 down to pay off my car. My bank account is lower right now so I don't have 20% to put down but you are telling me a person with $3500 net income and zero debt is not good to make a house payment? Yes, I could continue to save up and have the 20% next year but I want to buy now before rates trend back up.
This is completely false. My monthly net income is around $3,500. I have ZERO debt because I just put $8,000 down to pay off my car. My bank account is lower right now so I don't have 20% to put down but you are telling me a person with $3500 net income and zero debt is not good to make a house payment? Yes, I could continue to save up and have the 20% next year but I want to buy now before rates trend back up.
All about Conventional Loan( The BEST loan) The Conventional loan limit is 417000 it hard to get approve depending on your income. 1) Conventional loan request minimum credit score 620 and up the higher Credit score the lower chance of better rate. 2) Down-payment as low as 3 percent where as FHA request 3.5. NOT a request for 20% down anywhere in United State. 3) Beyer is not subject to mortgage insurance (MI) where as FHA loan need to pay. 4) Conventional loan can be used finance about any property but FHA restrict. You will qualify for a) 7 year since foreclosure b) 4 year since short sale. c) 4 year since bankruptcy. If you can down 20 % it's great. but I recommend 5% down minimum cause there is big different of saving money between 3% down and 5% down. Thanks
I do not know a single person with $20,000, 40,000$ laying around. With that said, I own a house, but need a loan to make it liveable, as the house was almost free.
![How Do I Find Foreclosed Properties? [#AskBP 044]](http://i.ytimg.com/vi/o8gTGL8Di0E/mqdefault.jpg)
The minimum amount of the down payment required for a conventional loan is 5% (we got one last year) and since its less than 20% you would have to pay PMI. One difference is that with conventional loans the PMI goes away (with a call or maybe a wand) after you pay down 20-25%, whereas FHA you pay the PMI or MIP until the loan is paid off.
+Andrew Shepherd Excellent point. As I watched this video, I was also thinking about 5% conventionals available, especially since I'm planning on using one for my first real estate investment. Another thing to keep in mind with PMI with conventional loans is that it can vary highly based on your credit, unlike FHA loans. I've seen an example where the difference between scores of 720 something and 740 something was almost double.
if you can't afford 20% for the down payment you can't afford a house.
BigD Travels There are federal subsidy programs available at the local level for down payment assistance for up to 20k for first time home buyers. The Fed gives money away, but most people don't know it. It's not heavily advertised.
BigD Travels I️ beg to differ actually used a VA Loan and had no debt going in and have been able to maintain my home and save money
I got a conventional loan approved with 3 %
A conventional loan now allows 3% down payment and 3% seller concession.
Exactly. I was about to sing a 3.5 FHA loan when my lender stopped me and said we gonna go conventional with 3% no PMI. Same down payment more money in my pocket every month. Idc about the rates.
Doesn't that differ with multi-family homes? I was told by a Chase lender that for a triplex, 20% is required, and for a duplex, 15% dp is required.
whoa---can you do a video on what you said: taking an FHA and putting down 3.5% and then buying a rental property at the same time?
Make sure you also watch a video on bankruptcy...
@@mp-xt2rg LOOOOOOOOOOOOOL
Love the FHA products! I just purchased a foreclosure using FHA 203k loan, renovated, refinanced and pulled all our money out plus some. We will use that money to purchase our next rental
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FHA is a great loan.
are there seasoning requirements for the FHA loan?
With the 203k you couldn't do the work yourself could you?
@@agent481989 great question. I’m not sure of the answer. If you are a licensed contractor, possibly but you would need to check into that
You explained this really well. Thanks for the great points about your strategy!
great video, very informative, I had exact the same question :)
Thanks, helped me a lot. :)
+Gin Amber Very pleased to hear you found some value in the video! Thanks for the love!
How does that make an FHA loan more affordable??? You put less down....that makes the mortgage less affordable.
It's less upfront down payment requirement.
Awesome video Brandon!! I would also like to know if FHA loans are for foreclosures. I mean if I can use an FHA loan on a foreclose plex?
Nice video how does does PMI or MIP fall off after 78% or do you have to wait 11 years to get rid of PMI also could you just get rid of the PMI if you refinance to a conventional
fha mortgage has a lifetime mortgage insurance??
@BiggerPockets You'd use the FHA and use the extra money to acquire another property, but you'd have to live in it for a year? How would that work for a rental property???
I'm 19 years old no work history, because I saw that to qualify for an FHA loan you need 2 years of work, am I totally out of the game for the FHA loan? or is there another way around it? Great video btw!
Can’t you co sign with your parents?
Get workin son! Work two jobs 80+ hours a week instead of partying and you'll be way ahead of the game fast!
I don't fully understand the comment about "getting another property" - if he is a first time buyer is his leverage not calculated using his income? Isn't that statement assuming that he has an income that allows multiple mortgages? especially if FHA is a higher monthly cost.
Any clarifying thoughts appreciated.
are you 7ft tall? wtf are you standing on
cmurrell43 this is about loans man.
Lmaoo
Lol
What about a fixer upper ? I have a similar situation,i have 40k in the bank buying a 140k fixer upper. Would you recommend getting a 203k loan or spending my own money to fix it?
A 203k may be worth considering!
Great question. Everyday with my clients we analyze this direction of what is better. I like how you listed out points for both sides.
Good Chanel and good information! I'm a huge fan!What if I already purchase a home (florida)with a FHA loan and now I want to get a second property. Can I put my primary home in a LLC rent it out and get a FHA loan for my second home?
You must be a first time home buyer to qualify.
PMI private mortgage insurance
Honestly it's not as bad as everyone thinks
At least you can still right it off for taxes
I love BiggerPockets, I tell anyone who's interested in real estate to check you guys out. My friend and I are looking to purchase a first house, but we'd ideally like to rent some of it out. There's an 8 plex in my area for sale for 175K, that is in liveable condition and brings in about 2K in rent a month. Would you consider getting a bigger loan to upgrade your units, and to possibly cover any unexpected costs that'll happen in the first few years? #AskBP I'm trying to look for my answer on my own by searching loan on your guys videos. Thanks for the fabulous work you guys do. I notice there isn't any ads on this video, you guys should apply for youtube partnership.
FHA is for upto 4 plex
Can I airbnb a unit in a multi-fam property purchased with FHA?
I just want to say thank you for making it understandable.
It's amazing video so nice of you I love it so much stay connected I pray you get 10 million subscriber god bless you
You don't get to write off the PMI do you? I dont think you do. Something else to consider as well.
Jaron Pope PMI has been tax deductible since Jan 1, 2007. It was supposed to end in 2014 but they extended it through 2015. There are income limitations. Single person $59,000 ? Married filing jointly AGI $109,000.
Do I get privacy?
Hey Bigger pockets, what your think about mortgage lender, it is a good idea to use them or a hard money lender? For a conventional loan.
@john Stetson And you can legally take advantage of them to make money. You don't sound like much of an investor.
thanks for the info, appreciated it much! does the pmi come off after some time or if you have the equity?
Thank you very much for this video. It really helps and I just wanted to say I really appreciate it.
Awesome advice! Keep em coming!
Here is you a question what should someone who is 100% disabled do say they want $50,000 for the property and they have no money for a downpayment and I get around $700 a month and disability but they always pay their rent first always but want to buy their own place any suggestions?
I'm finding out that sellers favor conventional over fha
You and me both. FHA's are being placed at the back of the list right now.
O wow 2 properties for the same as one i didnt even think of tha
Please update if haven’t already
Awesome video ! Thanks
how long do you have to live in a property if it is a conventional loan?
0 days. You could turn right around and flip if I’d you wanted to
Do you mean for a primary residence?
Good advice sir!
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I have a situation i'd love your input on.
I make 50k a year and my monthly bills are around $300
That being said I currently save atleast $2000 a month and i am currently at $7000 in my savings.
I am 22 and aiming for $80,000 for my first home, I'm torn between saving up 20% and using a conventional loan or using a FHA 203k loan and doing renovations for a few years and then moving up in the market via selling and buying a larger home. Which option is more wise in your opinion? Saving the 20% and staying in the home until i own it outright or using the FHA 203k to not tie up all of my savings and profit from the renovations?
What state u in?
Buy a multi-family home and use the minimum to get into it as soon as possible.
I say use an FHA loan for a multi family you can put like 25-30k down possibly less also including closing costs and you’ll be able to have tenants pay it off for you while saving more and gaining potential cash flow right off the bat whether its $100 or $150 cash flow while saving towards a second property. And in a year or so you can use what you saved and or use a HELOC towards your second home. You’re in a great position, brainstorm and take action keep us updated. It’s been five months but I’m curious as to where you currently are if you’ve made a move or not
Hi Angus, I hope the savings scheme is still working as well for you.
In your situation I would probably recommend the conventional. You will have a low mortgage payment and you will still be easily able to save money and progressively work on renovations. I'm assuming you're single and don't have many other bills but you may want to also stash a few thousand dollars as an emergency fund just so you aren't depleted when you buy your home. The FHA program, while flexible, will cause your mortgage to be higher IN ADDITION TO the PMI you will need to pay. If you're planning on living there for a few years, you WILL end up paying the difference you initially saved.
It also may not be a good idea to take on reno ambitions so early on in your home ownership experience, unless you grew up with a parent who was a contractor or else personally know someone who is experienced in flips very well. You will have plenty of time to build your savings back up with the monthly cost savings of a conventional, and you will probably make more disciplined decisions regarding remodeling as a result. In other words, you won't be tempted by a $15-20k pile of cash, eyeing stainless steel appliances and granite counter tops. Some renos will actually not do much to raise the value of your home, but that also depends on location and mere timing of the market.
Hope this helps. Best of luck!
franklin Marte I’m thinking of doing the same thing
I'm 23 years old and I've got 8k in savings and I'm pre qualified for a 150k fha loan. My plan was to still live at home and buy a single family house and rent it out , or if I could find a multifamily house or a duplex I would consider house hacking . What do you guys think my best option would be .
Great options all around.. if i woke up in your shoes i would live at home and buy a duplex to rent out both sides!
You have to occupy the house on a FHA.
Well I just made up my mind thx
thanks for another great video. Liked!
can 203k be used to rehab a multi family home if I plan to live there? How soon can I refinance the home after it is rehabbed and has equity? Does this loan carry a high interest rate after the rehab period is over?
yes(depends), 6 months(depends), no(depends). Find a local lender. they will guide you at no cost
Is that your personal library behind? I can't see it from here! Have any books on real estate?
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really enjoyed this video
So you can't use FHA loans for rental properties unless it's s duplex that you're going to live in for at least one year? Well that's a bummer.
You are required to live in your home for at least 1 year with an fha. The duplex comment was just an option. You can use an fha for single family. (As long as you live there for st least a year)
Michael Bacile Thank you.
You can go up to a 4plex with fha
Just because you can’t use an FHA loan on a rental property doesn’t necessarily mean that you can’t rent it out and make money from it. You can get a Single family home and live in one room and rent out the other rooms to friends or college students. You can also find a property with a basement and finish the basement with a bathroom and kitchen and make it into a studio then rent out the house and you still live there. You have tenants paying your rent and possibly your bills. House hack doesn’t always mean multi family. If you DO NOT plan on living on the property then FHA is a no go for you. I believe you can use FHA loan and after you pay off at least 20% of the loan you can refinance into a conventional loan and move out to either do another FHA loan or conventional.
Thanks Man
Thank u
Somebody! Would Somebody, who knows about FHA, Owner Occupied or 203K or USDA loans, please help me!!!! I already have a house. Living in it for 40 years! But never quite had enough money to finally finish remodeling it! Since I already own my house and I'm 3 months away from paying off my Heloc, what is the best loan for me? I want to rent out 3 bedrooms in my house and still live here. Can I get a 203K loan? Can I get a USDA loan for a loan on the house as well as repairs? I live 20 minutes out of town in upstate New York. What's the best loan for me and can I qualify? I want to turn my garage into a rec room and heat and remodel my sun room porch so it can be a bed room/TV room. Will my situation qualify for these loans IF I already own my house? I want to rent out 2 or 3 rooms and still live here.
7,5
ya max of conventional is 5%
not anymore. 3%
👍🏾
Hey me in future 👋🏻👋🏻👋🏻
If you can't afford 20% down for a house, you CANNOT afford a house.
This is completely false. My monthly net income is around $3,500. I have ZERO debt because I just put $8,000 down to pay off my car. My bank account is lower right now so I don't have 20% to put down but you are telling me a person with $3500 net income and zero debt is not good to make a house payment? Yes, I could continue to save up and have the 20% next year but I want to buy now before rates trend back up.
This is completely false. My monthly net income is around $3,500. I have ZERO debt because I just put $8,000 down to pay off my car. My bank account is lower right now so I don't have 20% to put down but you are telling me a person with $3500 net income and zero debt is not good to make a house payment? Yes, I could continue to save up and have the 20% next year but I want to buy now before rates trend back up.
All about Conventional Loan( The BEST loan)
The Conventional loan limit is 417000 it hard to get approve depending on your income.
1) Conventional loan request minimum credit score 620 and up the higher Credit score the lower chance of better rate.
2) Down-payment as low as 3 percent where as FHA request 3.5.
NOT a request for 20% down anywhere in United State.
3) Beyer is not subject to mortgage insurance (MI) where as FHA loan need to pay.
4) Conventional loan can be used finance about any property but FHA restrict.
You will qualify for
a) 7 year since foreclosure
b) 4 year since short sale.
c) 4 year since bankruptcy.
If you can down 20 % it's great. but I recommend 5% down minimum cause there is big different of saving money between 3% down and 5% down. Thanks
lol that's true
I do not know a single person with $20,000, 40,000$ laying around. With that said, I own a house, but need a loan to make it liveable, as the house was almost free.
Good vid