I need help knowing more about an FHA and commercial loans? as well as brining an property to code for rental income?

Asked by Alex Cabral, Lawrence, MA Tue Feb 28, 2012

I am a first time home owner and I'm interested in a property that just came on the market for 100,000 as in investment... I could do 20% of this house and possibly repair it to get rental income. The problem is .... would I loose on the FHA 3% purchase program, if i were to want to buy another house with a much higher cost?

As for the commercial loan... I know of a building that is not listed on the MLS and the seller is selling it for 189,000. It has commercial space on the first floor and about 5 illegal apartments on the 2nd and 3rd floor. the apartments are illegal because they are not on the deed and are not up to code. I want info on how to obtain a commercial loan as well as how much will an estimate cost to bring an apartment back into code? I know the apartments were built without a permit, and therefore might need a permit to reconstruct (plumming and electrical) and will also need fire escaladors as a 2nd way out. I need help to know where to start looking for more info

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Jim Simms’ answer
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Tue Feb 28, 2012
FHA is not limited to a first time homebuyer if that is what you are asking. Owning a rental property does not necessarily keep you from getting an owner occupied FHA mortgage if you qualify for it. The second loan application will question the rental property income:

When using current leases to analyze rental income, the borrower can provide a current signed lease or other rental agreement for a property that was acquired since the last income tax filing, and is not shown on Schedule E. In order to calculate the rental income:

Reduce the gross amount by 25% (or the percentage developed by the jurisdictional HOC) for vacancies and maintenance Subtract PITI and any homeowner’s association dues, and Apply the resulting amount to income, if positive, or recurring debts, if negative.
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