I am interested in a duplex in Provo, UT. My lender told me that I could not use an FHA because property was zoned as a duplex/two-family dwelling.

I would like to be a co-borrower to assist my daughter and her husband (owners occupants) with financing. They are students who live and work in Utah and would like to rent out one unit while living in the other as they finish their schooling.

Could someone let me know if this is possible?
From other research I've seen online, it would appear that others have purchased duplexes, even tri-plexes with FHA. Is it just state by state qualifications?

We would all be first time home owners. Any help would be greatly appreciated.

Find a new lender now, as he obviously knows little about FHA. Yes, you can use FHA for up to a 4 unit property.

@Henry Nelly  Find a new lender, this one does not know anything. You can buy a 1-4 unit residential property using FHA loan.

 Are you doing a Utah Housing loan? They do not allow two unit properties. Many people mix these two up because it's a first time buyer program.

according to the HUD website you can get a loan on multi-unit up to 4 units

http://portal.hud.gov/hudportal/HUD?src=/buying/loans