FHA Duplex loan

4 Replies

Hey guys first post here so I'll treat this as an introduction as well and then get on to my question. I am currently a property manager with a management company here in Lexington, KY and will soon have my RE license ( just have the exam left). 

I am wanting to get my first investment deal going and after some research and thought I feel that a duplex is what will suit me best. I am wondering if anybody has went through with the "FHA duplex" loan that they offer? Is it fairly common to obtain? I will of course be occupying one side and renting the other. Id like to find a place around here, or we are really wanting to move to Savannah, GA and my thought is if i decided to move it would really benifit to have the extra support with tenants rent.

Thanks for all of you guys help, and if any local investor needs any help or would like to pass on some knowledge I'm up for it!

@Shae Dean ,

I bought a 4plex for $375K with an FHA loan for my first purchase, when I only qualified for about a $250K SFH. 3.5% down. Good rate. Even with mortgage insurance, a great deal, IMHO. Would go back and do it again, no doubt.

As long as it's not in very poor condition, roof in tact, no health and safety hazards, it should mostly be OK. Always need smoke detectors, carbon monoxide detectors, and a strapped hot water heater for appraisal also, in CA. Check your local stuff with an RE agent or local loan broker..

As long as it's not a condo, meets the condition requirements, and you qualify, you should be able to get one. There are lots of restrictions & pre-approval for FHA needed with condos. But not so with SFH, duplex, or 4plex. For mine, and typically, they count 75% of existing rents for your income qualification.

They are not unusual, but take a bit longer than conventional to close. Maybe 30-40 days. So as long as the market you're buying in isn't too competitive, or as long as FHA is not unusual, you shouldn't have too hard of a time getting into contract with it.. But something to consider..

Hi Shea, I bought a duplex a few years ago and financed through FHA. It would have been tough for me to qualify for conventional because banks requied 20% down on 2-4 family props and cash was tight at the time. FHA mtgs only require 3.5% down so it is nice especially for newer home buyers. You pay for it though... There is an upfront fee of ~1% I believe and the pmi is extremely high. I Payed 192k for my duplex, the up front fee was 2k and the pmi is 167 a month. The worst part of the pmi is (on a 30yr fha mtg) it is locked for 5 years no matter the ltv. After the 5 years, it's not until you hit 78% ltv until eliminated. (Compared to 80% with conventional). on the flip side FHA usually offers the lowest market interest rate and credit scores do not come into play as much as conv. I locked In at 3.5% rate where I got quotes for conv at 3.85% (this was back in 2012).

As far as obtaining financing for an owner occupied duplex, it is no different than buying a sfr through fha.

Another cool thing about FHA, (and I was able to take advantage of this) after a year, you can move out and keep the prop as a rental without changing the mgt terms. You can then potentially get another FHA mtg on a 1-4 family prop which can quickly increase your re footprint. -theoretically, you could have 8 units after 1 year, all with 3.5% down and with a low, consumer based interest rate.

looking back, I wish I could have scrapped together the cash to avoid fha fees, but it got me started in re investing so I am glad I did it... hope this helps! (and make sure you talk to your lender/professional for full details)

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