Financing in 89130>Question Details

pangea845, Home Buyer in Chicago, IL

could i buy a multi-family up to 3-4 units with an fha mortgage and only have to qualify for the portion which would be my primary residence?

Asked by pangea845, Chicago, IL Tue Sep 4, 2012

it was explained to me that the rental income from the other units offsets the the total mortgage amount therefor allowing me to purchase a building that would be #1 greater than my pre-approved loan amount #2 not considered an investment property but a primary res. under normal fha guidelines??

2 votes Share Flag Financing in 89130

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Chris Harrison’s answer

Yes, you can buy from a Single Family residence all the way up to a 4plex with an FHA loan. As long as the property is owner occuped. Meaning the borrower of the loan has be living at the property as their Primary Residence. It can be done. I bought a 4plex in the past with an FHA loan and I lived in one of the units.

You will still have to qualify with your income and credit, and a portion of the rental income could possibly be used to offset the payment. As long as there are tenants already in place with long term lease agreements. You will have to put down 3.5% down payment and there will be another 3% to 4% in closing costs.

Get in contact with a good Mortgage officer like Darren with First Cal down below and they will be able to explain in detail their financing guidelines for FHA loans.

It's a competitive market right now. But, it is possible to get one. You will have to be committed and sieze the opportunty. Couple tips...Make sure you purchase a Home Warranty for the property. Hire a Property Management Co. to handle the rentals.

Good Luck!

Chris Harrison
(702) 592.9510

Barrett & Co., Inc.
Residential | Commercial | Property Mgmt.
2 votes Thank Flag Link Fri Sep 7, 2012
If it is 3-4 units:
-75% of the current lease can be added to your income
-market rent (determined by the FHA appraiser) less the vacancy factor (based on jurisdictional hoc) must equal or exceed your payment (including tax, ins, etc.).
-you must have 3 months of reserves (3 payments) in the bank after closing, prepaids, and downpayment are made
Flag Fri Oct 17, 2014
Multi-family can be defined as two, three or four units. More than four units is commercial.

You can qualify for a FHA loan to buy a duplex, triplex or 4plex as long as you live in one of the units as your primary residence. Downpayment is only 3.5% down.

FHA lending limits:
3 votes Thank Flag Link Wed Jul 22, 2015
Yes you are correct that you can use FHA financing to purchase a 2-4 unit property. Just make sure you plan on living in one of the units because FHA is a loan for owner occupied borrowers. Also, it only requires 3.5% down on this property type. If you have any further questions email me at or call me at 702-493-1924...
2 votes Thank Flag Link Wed Sep 5, 2012
You must qualify for the entire purchase amount of the property; some of the expected rental income will be included in your qualification process. Do you have rental experience? The lender will add more projected rental income to your qualification if you have owned rentals in the recent past. You should contact a local mortgage advisor for personalized advice.
0 votes Thank Flag Link Mon Dec 22, 2014
Saw this information at, which speaks to FHA lending limits for single-family, duplexes, triplexes and quads. You just have to click on your state:

By default, it would seem that the straight forward answer is 'yes' - you can use FHA backed loans to acquire the above properties, providing that you're occupying one of the units as your primary residence.

What we found to be harder, is finding a mortgage lender who will provide the FHA loan for triplexes and quads. Quicken Loans - the largest FHA lender in their words - only does single family and duplexes according to our specialist. We'd love to find someone in New England that does it.
0 votes Thank Flag Link Mon Dec 22, 2014
The answer is....sometimes...sounds like you need to write down all the details of the property, then sit down with a mortgage broker and hopefully you have a Realtor that understands investment properties. If you don't have a Realtor that has done this before, get one before you do anything else, 'cause your fun has just begun.

1) For FHA, owner occupied is owner occupied
2) The income used to be weighted a lot more in the past than now...we think, maybe, depending on who one talks to
3) Confusing? That seems to be the idea.

Bottom line, the guidelines appear to be, you have to have enough income to handle the mortgage, then the underwriters throw in the rental income to make your loan a stronger package to enable you to get the loan.
Web Reference:
0 votes Thank Flag Link Sun Jun 2, 2013
Good afternoon,

The FHA Program does indeed allow for inclusion of market rentals for the subject property in the qualification of Income. That having been said, many Lenders today are restricting the use of rental income to qualify.

Your best course of action is to meet face to face with a Local Mortgage Banker to get thoroughly prequalified based on that Lender's guidelines.

Trevor Curran
NMLS #40140
0 votes Thank Flag Link Thu Sep 27, 2012
Hi, pangea845.

The agents below have given you very sound advice. You are absolutely able to go FHA with a multiplex which is 4 units or below. As for other particulars, we would need to ask you a couple more questions about your current status. Meanwhile, here are a few financing facts that might help you in your quest for success:

Also, if you would like to perform a direct search for multi-family properties, you may do so directly through our "MLS Integrated" website at:

Additionaly, there are a few we have purchased recently, so NOW is a great time to do so. We recommend the following (don't worry, they are already graded for cap rates, ROI, desirability, etc):…

If you have any further questions or concerns regarding this purchase, we specialize in the multi-family are welcome to contact us directly.

Limestone Investments, LLC.

LV Property Search
(702) 287-1092
0 votes Thank Flag Link Mon Sep 24, 2012
We go down to a 620 FICO score on all our FHA products. Normally credit history in the perfect world we like to see 2x24 or 3x12 months on the tradelines on traditional credit. However, there is some flexibility under this with the automated decisioning. Soure of income, must reflect on your tax returns or we can't use it.
0 votes Thank Flag Link Wed Sep 5, 2012
What is your FICO score and credit history? Source of income?

David Cooper Investor 702-499-7037
0 votes Thank Flag Link Wed Sep 5, 2012
Hi Pagra845

I would recommend that you talk to FHA mortgage Broker, I suggest that you contact
Barbara Estes @ WJ Bradley Phone (702) 281-0122

If I can be of further assistance and answer
Any of your other questions please contact me

Jimmy Balsano
Realty One Group
Fax 1-866-371-8421

0 votes Thank Flag Link Tue Sep 4, 2012
There is some good info here and definitely at least one incorrect statement. You will want to review with an experienced FHA lender on qualifying ratios and guidelines. But I'm afraid the bigger issue you are going to face is being nudged out of that market by cash buyers or those with more conventional loan products. Multi-family properties are again a hot product for investors so you are going to have a lot of competition. I know, it can be frustrating for owner-occupant buyers.
John A. Brassner, MBA, REALTOR®
Residential â–ª Commercial â–ª Business Sales

Prudential Americana Group, REALTORS®
10777 W. Twain Ave #333
Las Vegas, NV 89135
Cell: 702-808-9816
Fax: 702-995-0488
0 votes Thank Flag Link Tue Sep 4, 2012
No. FHA loans are for owner occupied residences. You can't buy investment property with an FHA loan. Sorry to disagree with my colleagues but this is the correct answer. 4 plexes are investment properties - even if you live there.
0 votes Thank Flag Link Tue Sep 4, 2012
Wrong :) FHA will do 2-4 units all day long IF you live in one unit of the property
Flag Fri Sep 12, 2014
You'll need a minimum of 10 to 20% down depending on your credit and personal income raitios. Only a portion of the properties income will go toward loan ratios and it usually is 65 to 80% depending on age of property and comps for the area. We are a property managment company with over 350 properties under managment and have a lot of experience with rental income properties. Let me know if you need any more help. Matt and Kim

Matthew D’Ercole
One Source Realty and Management
Cell - 702.501.0973
Website -
0 votes Thank Flag Link Tue Sep 4, 2012
Wrong, as with all FHA loans, you only need 3.5% down. I am using this type of loan now to purchase a 4 plex. The amount of the current lease income that you can use for qualifying is 75% everywhere. The percentage used for vacancies for the sustainability test, however, varies by Jurisdictional HOC. the highest is 25% vacancies (75% of rent income eligible). The income for that, though, is based on market rates not current leases.
Flag Fri Oct 17, 2014
If you live there it is considered an owner occupied loan. Any lender will only consider partial rental amounts based on comps in the area and similar size. It is usually 75% of what total rents would be. This can add to your "income" however, it may not add up to much once you factor the extra payment. The lender uses this for vacancy or repairs needed on the additional units. A top notch inspection is needed and well worth the money as well as a home warranty. Be careful and ask several lenders.
0 votes Thank Flag Link Tue Sep 4, 2012
Wrong, the income used to qualify is based on existing leases. The market rent is used for the sustainability test.
Flag Fri Oct 17, 2014
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