Purchase 4-plex as a co-borrower with my brother and FHA loan

4 Replies

Hi everyone. My husband and I currently own one SFH and just got an offer approved on our second one. We live in New York and invest in Florida where we are originally from. My brother, who lives in Florida, really wants to get involved in real estate but he does not have any money and does not own a home yet. He wants to also purchase his own home next year before his wedding, but again has no money for this, actually has a good amount of credit card debt. My husband and I are wanting to get a multi-family and are thinking a great way to get my brother involved is the following:

  • My brother would get an FHA loan for a triplex or 4-plex in Florida
  • I would put the 3.5% down payment as a co-borrower
  • My brother and his fiancé would live in one of the units for a few years rent free so they can save money for a house
  • My brother would manage the property by showing units, cleaning them when someone moves out, and as much maintenance as he can handle on his own
  • I would handle the finances paying the mortgage using the cash flow and keep the profits since my brother is living rent free
  • My brother would move out eventually (2 or 3 years later) and we would refinance into a regular mortgage so that he can get another FHA loan
  • We would begin splitting all profits 50/50 once he moves out

My question is, has anyone reading this done this before? I read some of the FHA requirements and I think my brother would qualify. The only thing is he has not been at his job for over two years as he recently got a new job. Another question is, would we have to refinance or would my brother's fiancé be able to get her own FHA loan a few years down the road, even if they are married by that time? Is it allowed for a married couple to each have their own FHA loans or once you're married you can only have one no matter if both names are on it or not?

I thought this was a great way to have him involved and to also help him be able to save money for a SFH that he'd want to live in for the long term. Any advice is appreciated. Thanks!

@Elenis C.:  I would actually talk to a mortgage person to find the best option.  There may be other products out there or a different way to structure the deal since it appears you two are in completely different situations.  Also, I assume your brother has laid out a plan to get him out of credit card debt? 

Interesting question. I don't know about the married couple FHA loan, but I believe you would need to live in that house. If they are married how can they have different home address? Will be hard to explain. I would go with refinance first but as Anthony suggested talk to a mortgage person...

Also, I suggest make sure you are both on the same page, write it down on paper that you both sign - so later you can revisit if memories fade...