At Blink, we pride ourselves on being available 24/7 to answer questions for Real Estate Investors, whether seasoned pros at investing or brand-new investors with unique questions. We recently got this question, and in 17 years in the business, I think this was a first, yet a very important question, so read up.
Question 1: How does purchasing an investment home before purchasing my primary home impact my primary home loan options?
Answer: In short, this likely won’t affect you. Why? As a first time homebuyer your main advantage is having access to loan programs with as little as 3% down. Not a better rate, not lesser loan qualifications, simply access to a lower down payment which includes Private Mortgage Insurance (PMI) and due to the lower down payment the PMI is more expensive than if you were to put down 5% – 15% and of course 20% down eliminates entirely.
Investment properties require a minimum of 15% down and you’ll really want to put 20% down to avoid the expensive investment home loan PMI.
Couple this with the fact that your current liquid assets are more than 20% down payments for both your primary home loan and your investment home loan(s). All of a sudden putting down the minimum 3% for a first time homebuyer becomes a moot point and not a very attractive option as you have the means to reduce your PMI should you chose to put less than 20% down.
All this on top of the fact that you more than Income Qualify for both loans without the need of the rental income from your investment property to offset the investment home loan payment and you are free to do what you like. You’re in charge of how you want to do this – you can either buy the investment property first, then your primary home or vice versa. If this were not the case with your finances, then you would want to buy your primary home first and then your investment property. Because until a ‘borrower’ owns their own primary home they are unable to include rental income to qualify for Conventional financing unless they have 2+ years of landlord experience. It can get tricky, that’s why Blink is here to help.
