Can you use an FHA loan to buy a house with more than one unit?

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Quick Summary

  • With an FHA loan, you can buy any multifamily home with up to four units.
  • FHA loans make it much easier for first-time buyers to buy a home because they don’t require as much of a down payment and allow credit scores as low as 500.
  • One of the most important requirements for getting an FHA loan for a multifamily home is that you have to live in the property you want to buy for at least a year.


FHA loan requirements are easier to meet than those for conventional loans because the credit score requirements are more flexible and the down payment options are lower. So it makes sense that people want to know if they can use an FHA loan to buy a house with more than one unit.

In this article, we’ll talk more about FHA loans and how they can be used to buy homes with more than one unit. We’ll talk about their standard requirements so you know how to get approved.

We’ll also talk about the different ways an FHA loan can be used, its benefits, and how you can start the process to get one for yourself. After reading this, you should be able to make an informed decision and save money on the cost of buying a house.

FHA Loan Requirements for Multiple Units

To qualify for an FHA multifamily loan you need to meet certain standard requirements that are set by the Federal Housing Administration (FHA). The FHA is a government-backed agency that insures loans made by lenders who are approved by the FHA.

Some people think that this type of loan is only for people who are buying their first home, but this couldn’t be further from the truth. This type of loan has helped many people buy their second or even third home.

Here are the requirements of an FHA multifamily loan:

  1. Credit score: To get an FHA loan for a multifamily home, you need a credit score between 500 and 580. Some FHA loans have programs for people with no credit score at all, but this can be different from one lender to the next. In place of a credit score, these programs may ask for proof of past insurance payments, rent history, or cell phone bills.
  2. Down payment: A 3.5% down payment is needed if your credit score is at least 580, but a 10% down payment is needed if your score is between 500 and 597.
  3. Mortgage insurance: According to FHA rules, the total debt-to-income (DTI) ratio can’t be more than 43%. But candidates with good credit scores and more cash on hand may not care about this. If your DTI score is good, your chances of getting a loan could go up.
  4. Debt-to-income ratio: FHA guidelines allow a total debt-to-income (DTI) ratio of 43%. But this can be overlooked for candidates with strong credit scores and greater cash resolves. Having a good DTI score could increase your chances of getting your loan approved.
  5. Home occupancy: FHA loans for multifamily homes require you to live in the property for at least a year. Borrowers are usually checked up on by the Department of Housing and Urban Development (DHU), to ensure they’re following the occupancy rule.
  6. Proof of employment: You must have a steady source of income or proof of employment before applying for an FHA loan.
  7. FHA appraisals: For your home to qualify for an FHA loan it needs to pass the FHA appraisal test. Usually, an FHA appraiser just goes to the house to check for structural soundness and general safety.

Even though the FHA has standard rules for getting loans approved, each lender may add their own rules on top. Make sure you do enough research and talk to your lender well before you jump into a deal.

Can I use an FHA loan to buy a four-unit building?

Yes, you can use an FHA loan to buy a four-unit building. The good news is that you don’t have to live in all four units of a fourplex to get this type of loan, even though it is mostly for owner-occupied homes. Instead, you can rent out the other three units while you live in one and run the business as the landlord.

Even though you can rent out the other units in a quadplex, you can’t use it as a hotel or bed-and-breakfast, which is against the FHA’s rules for this type of loan.

With an FHA loan, how many units can you buy?

The Federal Housing Administration says that an FHA loan can be used to buy a house with anywhere from one to four living units. As long as you follow their rules, you can use this type of loan to buy any property that meets their requirements. But you have to make sure:

  • The houses that were bought will not be used as rental properties. Instead, they will be used as main homes.
  • At any given time, you can only use an FHA loan to pay for one home.
  • There are no more than four housing units.

Can you use an FHA loan to buy an apartment building?

You can use an FHA loan to buy an apartment as long as the apartment meets FHA requirements. You will have to live in the apartment as your main home for at least a year and move in within 30 to 60 days of buying it.

The only way around this mandate is if the said apartment isn’t conducive enough to serve as a living space. In this case, an FHA 203k loan which can be used to finance home fixer-uppers might be required.

How to Get an FHA Loan for Multiple Units

With down payments as low as 3.5% and flexible credit score requirements getting an approved FHA loan for a multifamily home is possible, even for the “subprime”.

Here are four easy steps to follow:

  1. Meet the loan requirements:Before you decide to apply for this loan, you need to look over the requirements and make sure you meet them or at least have a chance of getting the loan.
  2. Find a lender: After you’ve made sure you meet all of the requirements, it’s time to do some research and find a lender who works with the FHA. FHA loans are available from mortgage brokers, credit unions, and even banks, so it won’t be hard to find one.

Most lenders will want to know your name, social security number, property address, and the amount of your down payment.

  1. Apply for your FHA loan: Once you’ve found good lenders, you can fill out an application, which is usually done online or by e-mail. Since overlays vary with FHA lenders, ensure you submit multiple applications so you get a disparity in the offers you get back.
  2. Compare loan estimates: After you’ve reached out to potential lenders and received loan estimates from each one, compare the estimates and try to choose the one that fits your needs the best.

It’s best to get quotes from at least 5 lenders. This way, you can compare quotes from different sources.

After you’ve compared your options, it’s up to you to make the right choice and choose the right lender. You shouldn’t make this choice quickly. take your time!

Make the most of this great chance

Life can be hard to plan for, and that’s why there are loans like these. This means that you can still use an FHA loan to buy a multifamily home, even if you’ve been through foreclosure, bankruptcy, or haven’t saved enough money for a down payment on your first home.

Less and less people are trying to buy homes, so now is a great time to buy your dream home. FHA loans make it easy to become a landlord, even if you have a low credit score.


What is The FHA Self-Sufficiency Test?

The self-sufficiency test helps you determine if the total amount you receive, in rent, from all the housing units is greater than or equal to the mortgage payment. If you think you could make less in rent than the value of your mortgage, your property is not self-sufficient.

What Would Make a Home Not Pass an FHA Inspection?

A home might not pass the FHA appraisal test if, after being inspected, the FHA appraiser decides that it is unsafe to live in.

Can You Buy 2 Houses at The Same Time With an FHA Loan?

No, you cannot buy two properties at the same time with an FHA loan, it is against the loan guidelines. However, if you’ve converted one of your FHA-owned homes into an investment property, you could refinance into a new one.

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