3.5% down Own Instead of Rent in Los Angeles

FHA Financing – Live Rent Free

Benefit of FHA Financing

An FHA Financed Duplex is a great first time investment and we offer financing analysis for you. Not only is an FHA mortgage a great way to buy a 1-4 residential property with little down, it offers a real strategy to acquire additional properties. Often rates on FHA loans are lower than conventional, the allowable debt to income ratio is higher (in 50’s), and guidelines are more flexible allowing individuals an affordable route to real estate ownership.

At C2 Financial, we have lenders that will do FHA loans with credit scores in the 500’s. Waiting periods for bankruptcy and other credit issues are shorter. And, if you have a tax lien for tax debt, the FHA states:

“Tax liens may remain unpaid if the Borrower has entered into a valid repayment agreement with the federal agency owed to make regular payments on the debt and the Borrower has made timely payments for at least three months of scheduled payments. The Borrower cannot prepay scheduled payments in order to meet the required minimum of three months of payments.”

Live Rent Free

An FHA Financed Duplex is a great first time investment and may allow you to live rent free.

An FHA Financed Duplex will allow you to put down as little as 3.5%, does not require landlord experience, and allows use of the rental income to qualify. This makes it possible to buy more than you can afford because of the rental income. In many areas you can find a reasonably priced duplex, where you can live in one unit and collect rents on the other units. How great is that?! The lender will use 75% of the rental income along with your other qualifying income. After a full one-year of an owner occupancy of your duplex you can legally move out and convert the owner unit into a rental. After 2 years of landlord experience, you can purchase a second investment property and start growing your real estate portfolio.

Derogatory Credit Issues

Bankruptcy

You can buy in 2 years from the discharge of a Chapter 7 bankruptcy, or 1 year after the discharge of a Chapter 13. Conventional financing requires a 4 year wait from the discharge of a Chapter 7, and 2 years from the discharge of a Chapter 13 bankruptcy.

Foreclosure, Short Sale or Deed in Lieu

You can buy in 3 years from the date your name is removed from title through a Foreclosure, Short Sale, or Deed in Lieu. If the loan being paid off is also an FHA loan, your waiting period will begin when the HUD Mortgage insurance claim is paid. This is called “clearing CAIVRS”. CAIVRS is the tracking system for tracking federal student loans, and FHA mortgage insurance claims. It’s full name is Credit Alert Verification Reporting System.

Waiting Periods

Waiting periods begin on the date that the event is recorded. After the waiting period, you may not be able to get an approval (or FHA number) until after the period is over. This is unlike conventional mortgage waiting period which require that you sign loan documents after the waiting period is over.