via FHA or USDA?


I’m a first time home buyer looking to buy an owner occupied income property. I’m still in the researching options phase and have not spoken with a lender. Though, I actually have a private lender that I can use and have spoken with them but I would get cheaper interest rates with FHA or USDA so I’m looking for general advice, insight, information, knowledge or personal experience with those loans.

I’m not sure what the better option would be. I can do the 3.5% down for an FHA but it would break the bank. For obvious reasons I’m not comfortable with this.

I would prefer a USDA with no money down but it seems the stipulations for income property are that you must offer low income housing. I’m not against that at all as long as the numbers work. I’m just curious how that works? How is a cap on rent set? Is it a condition for the duration of the loan or just a certain amount of years? If I refinanced down the road would it be still be a stipulation? What are the pros and cons of this stipulation?

I’m just curious what others have done if in a similar situation or what you would recommend in general in this situation.

I should add that where I’m currently renting has gone into foreclosure and at some point (this year I imagine but with the virus who knows) I will have to move so waiting to save more money isn’t something I can really do or want to. I hate to hit my savings to move to another rental and would really like to purchase an income property instead. If your advice is to wait and keep renting though then tell me.

Thank you for any words of wisdom! They are appreciated.

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