Down payment assistance program worth it?

[thorbjorn88]

I've been trying to do some numbers on a down payment assistance program. Basically, they'd provide a 4% downpayment and an FHA loan at 5%. I've plugged this into a spreadsheet to compare with a standard FHA at 3.79% (with 4% down) which is what my credit union is currently advertising. Assuming PMI is the same I've divided the down payment amount by the difference in monthly payment to get a break even point of 4 years 10 months.

I plan to live in the property a few years (a duplex) then probably refinance the loan into a traditional investment loan and take out a new FHA on a single family home to move into while renting out the duplex.

 Am I missing anything? Do you think it's wise to do the down payment assistance program if I refinance after about 3 years? Is there a better strategy for moving out of the duplex into a single family while renting it?

[NoNonsenseLandlord]

Free money is always good.

In this case, just work out the monthly payment.  Choose the lower one.  If you refinance after 4 years and 10 months, you are ahead if you can refinance lower.  If rates are higher, maybe not.  That may be just straight line comparison, not a NPV comparison.

Your down payment is not much different between the programs.

[thorbjorn88]

Thanks for the input!