Buying Multi-Unit Property with an FHA Mortgage
March 27, 2025
Some house hunters ask why this rule exists. Some believe the rule serves as a lender risk mitigation strategy.
Being an owner-occupier allows for greater control over property maintenance and tenant relations, reducing potential liabilities. This active role also allows for a greater knowledge of the local market and the ability to adjust rental rates accordingly.
Not all borrowers want a duplex so they can become landlords. But those who do should know some of the intricacies of doing so.
FHA Duplex and Triplex Loan Limits
FHA loan limits, subject to regional market variations, determine the maximum borrowing available with a conforming FHA mortgage. Duplexes and triplexes qualify for increased loan amounts because they have additional living units. Single-unit residences have lower FHA loan limits.
Appraisals and Inspectons
The appraisal process determines the property's basic livability and remaining economic life. A home inspection is a more in-depth look at the condition of the units; do not skip this important step.
If you plan to be a landlord with your FHA loan, your lender may ask you to submit projected rental income, and you may need to show your bona fides as a previous landlord or property manager.
Loan Prep
These loans are riskier for the lender. Credit scores, down payments, and cash reserves are important for these transactions. Higher credit scores yield favorable loan terms, optimizing interest expenses.
Bigger down payments represent your ability to afford the loan and manage interest rate costs. Do you feel your credit isn't as good as you'd like it going into the process? Having a larger down payment could offset some lender concerns.
Issues to Consider
Owning property in a known natural disaster zone can be tricky. Increased dangers of wildfires, tornadoes, tropical storms, and heavy winter weather may force some borrowers to consider adjusting their budgets to include contingency funds, additional insurance, or other protections.
Don't forget to factor in your area's cost of living, maintenance, and routine upkeep of common areas.
FHA Loan Articles
January 28, 2025Are you dreaming of transforming a diamond-in-the-rough house into your ideal home? Fixer-uppers offer a unique opportunity to personalize your living space and potentially build equity at a price lower than some occupant-ready homes.
January 27, 2025When buying or selling a home, two critical processes are often confused: the appraisal and the inspection. Though both involve a thorough examination of the property, they serve distinct purposes and provide different types of information vital to a successful FHA loan transaction.
January 22, 2025Consider this scenario: you've been in your home for five years or more and you've likely built up a significant amount of equity, and now you might be wondering how to put that equity to work for you. Whether you're dreaming of a major renovation, need to consolidate debt, or want to help a child with college tuition, you have options. Two choices are an FHA cash-out refinance and a home equity line of credit (HELOC).
January 20, 2025The FHA Streamline Refinance offers a refinance option for those who don't want to cash in on their property's equity but instead want a lower payment or interest rate or who need to get out of an adjustable-rate mortgage. This streamlined program, designed specifically for those already in an FHA-insured mortgage, simplifies the refinancing process with fewer requirements and faster approval times depending on the transaction.
January 16, 2025Want to buy a home and thinking about getting an FHA loan? FHA loans are a great way to make homeownership happen, especially if you're a first-time buyer or don't have perfect credit. But you might wonder, "Can I get more than one FHA loan?"
The short answer is, it's tricky. The FHA itself doesn't say no automatically to having more than one loan. But there's a caveat. FHA loans are about helping you buy a place to live in – your main home base. Because of this, and a few other things, getting multiple FHA loans isn't easy.
