If I buy my first house at $500k using an FHA loan, and I want to eventually buy a $1MM home (with a conventional 20%-down loan), how do I calculate the time at which the sale of my first house will result in having $200k cash-on-hand? Equity, Market growth and Interest vs Principle all factor in here, but I'm not sure how to turn these variables into an equation.
I'm planning on using a 3.5%-down FHA loan to get into my first house in an area with very rapid price growth.
I understand that once the Loan-To-Value ratio reaches a certain point (~80%), refinancing with a conventional loan would help me avoid the need for Mortgage Insurance. However, I'm also considering that my first house will likely be smaller than what I would prefer and if I can end the initial FHA mortgage loan by selling my first house with enough equity to move to a larger house using a traditional 20-percent-down mortgage, I can kill two birds with one stone by 1) ending the PMI and 2) living in a house that suits my needs.
Because of the nature of the typical mortgage amortization, I know that I will be paying mostly interest at first. This seems to imply that it will be easier to refinance the home once the LTV reaches a certain point, and at a later point it will be possible to sell the home and end up with enough cash-on-hand to make a 20% payment down on a more expensive home.