Multifamily Homes For First-Time Home Buyers
In the current housing landscape, single-family home inventory is low. Home prices are rising and many first-time home buyers are getting priced out of the market. People that may be more wealthy, like investors, have also come into the market to take homes because of their lack of availabiljtty. With low inventory, everyone wants to get their hands on a house. Many first-time home buyers imagine themselves buying a starter home as their first house. However, low inventory and high home buyer demand means that even starter homes are unaffordable for many. Your first home should not break your bank. It is important that home buyers make sure they are aware of every possible option. First-time home buyers do not often consider looking at multifamily properties as their first house. While multifamily properties are not usually on the top of first-time home buyer minds, maybe they should be.
3 Reasons First-Time Home Buyers Should Buy Multifamily Homes
Many imagine that their first home will be a starter home – a little home, with a little yard – something cute, but something that will eventually be outgrown. Unfortunately, even these starter homes are going for outrageous prices. First-time home buyers need to reimagine what they thought their first house would look like and consider other possibilities, like a small condo or duplex. There are 3 reasons why first-time home buyers should consider buying a multifamily property:
First-Time Home Buyers Can Use FHA Loans
Many homebuyers may feel daunted that tehy do not have the ability to pay for a down payment on the home they choose. With the potential for expensive payments, it’s smart to be flexible in your options for owning a home. First time home buyers can consider using an FHA loan to help them pay for their new multifamily home. One of the most significant considerations you need to make when buying a home is budgeting for a down payment. Conventional wisdom is that you need to set aside 20% of a house’s value for a down payment. However, this is a myth.
Several loan programs allow you to put less than 20% down for a home loan. One of the methods is getting an FHA loan. FHA loans have backing from the federal government and allow people who have less than perfect for getting their home. In turn, this will enable you to be flexible with your budget and put a smaller down payment. If you qualify for an FHA loan, reduced costs range from 3.5% to 10%. The 10% applies to people with a credit score ranging from 500 and 579. The 3.5% is for credit scores that are at least 580.
Rental Income Factors Into Mortgage Qualification
Rental income can help you achieve the mortgage that you want. Rental income is a payment for the use of occupation of the property. You can use projected rental income on some of your units to help you qualify for a mortgage. It is important that you can establish that your rental income can continue. This would mean that you need to find tenants to live in the home so that there is probevn documentation of income. If the income is undocumented then there may be trouble. No proof of income could mean that lenders would be less likely to support your mortgage qualification.
Even though multifamily properties are larger and more expensive than single family homes, projected rental income makes them more attainable for many first-time home buyers. The ability for you to gain money from your home provides a good return on investment.
Buy a Single Family Home Tomorrow
Buying a multifamily home does not mean that you have to throw away your dreams of a single family home. It’s best to use your multifamily home as a stepping stone to getting something else. You can use the rental income to pay down your mortgage on your multifamily home. After that, you can use the funds to save up for a down payment on a single family home. The best part about multifamily homes is that it provides a consistent cash flow to your wallet that allows you to look inwards to the future.
Multifamily housing also could lead to your single family home faster because of the ease of investing. It can be a hassle managing 20 different single family homes. However, it is much easier to manage one place where all the units reside. This is more ideal because you are guaranteed to only need one loan. There is a chance that with owning multiple single family properties, you may need more than one loan. This way of getting into investing allows you to be put on track so that you can get that dream home.
Final Thoughts
When people think of houses they tend to think of a single family home for their family. While this is ideal for many, and not a bad goal to have, the current housing climate can make it a struggle. Multifamily homes are usually not the first option, but they present a viable alternative. You will still be able to live in the comfort of your own home, but also have tenants who can help pay your mortgage, if not more. These houses are also compatible with FHA loans, which can help many people get on track to having the home they want. Investing could be a great tool to get the single family home that you want.
At the end of the day, the team at Streamline Realty is here to help you make the best decision for you and your needs. We encourage you to contact us if you are interested in a single or multifamily home. We can assist you every step of the way.
