Comments on: New Jersey FHA Loan Limits Effective January 2010 http://newjerseymortgageblog.com/fha-loan-limits-in-new-jersey-effective-january-2010 ... Keeping New Jersey Consumers and Mortgage Borrowers in the Loop ...... Mortgages, Refinancing, Credit & More... Thu, 17 Nov 2011 23:43:35 -0500 hourly 1 http://wordpress.org/?v=3.1.2 By: Carol - The Administrator http://newjerseymortgageblog.com/fha-loan-limits-in-new-jersey-effective-january-2010/comment-page-1#comment-279 Carol - The Administrator Wed, 10 Feb 2010 23:37:25 +0000 http://newjerseymortgageblog.com/?p=1945#comment-279 @Jerry Gold - There are additional requirements when buying a 3 unit or 4 unit home. If you want to put down the minimum of 3.5%, we must do a separate calculation. FHA requires that 85% of the current gross market rents (determined by the property appraiser) for all the units must be equal to or greater than the mortgage + property taxes + insurance (PITI). If rents are less than PITI, then you will have to increase your down payment until that calculation is equal to or greater than. You must also have at least three months of PITI in cash reserves (money in a bank account or fairly accessible somewhere) after your close your loan. For example, say you want to buy a 4-unit property for $500,000 and the market rent for each unit is $1,500. The total gross rental income would be $6,000. We then multiply $6,000 X 85% to get $5,100/mo. If the PITI with 3.5% down on a $500,000 four unit property with an FHA loan is $3,700, then this scenario would work out. But if the PITI would be $5,500, then you would have to increase the down payment until we get the PITI down to $5,100 or less. To your question about finding tenants, you are free to seek out tenants via word-of-mouth, etc. But it might be difficult to show the property and you would not be able to sign a contract until you close the loan. You can't rent a property you don't own. But this is why FHA requires you to have the reserves. You might need those funds to pay the loan until the property is fully occupied. FHA is a great way to buy a property like this because you essentially get a primary residence/investment property with the virtual ease of buying a regular single family home. There is no other way to buy a 4- unit property with a 3.5% down payment. AND you get mortgage rates equivalent to the rates for a primary single-family - NOT rates for an investment property. Give me a ring for any other questions or if you need a realtor to locate a great buy. @Jerry Gold – There are additional requirements when buying a 3 unit or 4 unit home. If you want to put down the minimum of 3.5%, we must do a separate calculation. FHA requires that 85% of the current gross market rents (determined by the property appraiser) for all the units must be equal to or greater than the mortgage + property taxes + insurance (PITI). If rents are less than PITI, then you will have to increase your down payment until that calculation is equal to or greater than. You must also have at least three months of PITI in cash reserves (money in a bank account or fairly accessible somewhere) after your close your loan.

For example, say you want to buy a 4-unit property for $500,000 and the market rent for each unit is $1,500. The total gross rental income would be $6,000. We then multiply $6,000 X 85% to get $5,100/mo. If the PITI with 3.5% down on a $500,000 four unit property with an FHA loan is $3,700, then this scenario would work out. But if the PITI would be $5,500, then you would have to increase the down payment until we get the PITI down to $5,100 or less.

To your question about finding tenants, you are free to seek out tenants via word-of-mouth, etc. But it might be difficult to show the property and you would not be able to sign a contract until you close the loan. You can’t rent a property you don’t own. But this is why FHA requires you to have the reserves. You might need those funds to pay the loan until the property is fully occupied.

FHA is a great way to buy a property like this because you essentially get a primary residence/investment property with the virtual ease of buying a regular single family home. There is no other way to buy a 4- unit property with a 3.5% down payment. AND you get mortgage rates equivalent to the rates for a primary single-family – NOT rates for an investment property.

Give me a ring for any other questions or if you need a realtor to locate a great buy.

]]> By: Jerry Gold http://newjerseymortgageblog.com/fha-loan-limits-in-new-jersey-effective-january-2010/comment-page-1#comment-274 Jerry Gold Tue, 09 Feb 2010 14:26:44 +0000 http://newjerseymortgageblog.com/?p=1945#comment-274 If I want to buy a house with 4 apts but right now there is nobody renting and no income is ther from rents, how can I buy it without showing I can pay the entire mortgage? Am I allowed to find renters before I buy and move in? If I want to buy a house with 4 apts but right now there is nobody renting and no income is ther from rents, how can I buy it without showing I can pay the entire mortgage? Am I allowed to find renters before I buy and move in?

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