Purchase a Duplex on an FHA 3.5% Loan

18 Replies

Hey BiggerPockets!

Does anyone have any experience doing this and willing to share?

I am looking at purchase a duplex that would also be my Primary residences. Live in one side with roommates while renting out the other side. Just curious of everyones thoughts on this as a first investment. Would love to know your experiences with doing this specifically with an FHA loan.



This is one of the best ways to break into Real Estate Investing in my opinion. I wish I could go back in time and purchase a duplex to house hack instead of a condo. You get the benefits of owning real estate and have someone else pay some or all of your mortgage. You can then save that extra money to put towards another purchase down the line.

I believe that you will need to live in the home for 3 years, not necessarily consecutively, before you can get a new FHA loan like this, but if you were to do this over the next 10 years you could have 3 duplexes that are all cashflowing. Not to mention the other potential properties you could have purchased with that saved money from living rent free.

Do you already have a property you have your sights on?

@Nathaniel Hovsepian My thoughts exactly! Doing it this way seems to provide a lower barrier to enter the investing world and is a great learning experience since I'd live on the property. Do not have a specific property in mind yet but looking in the $125-150k range. In my area "average" rent is close to $350 a bedroom.

@Joe A Warner it absolutely does lower the entry point to investing, and it sounds like you should be able to live rent free. This will free you up to make other financial moves that set you up for future successes.

If you can support the full mortgage by yourself, this is a no brainer to me. 

Using an FHA Loan is exactly how I entered the real estate investing world! I was able to use seller concessions (up to 6% of the purchase price) to also help lower my cash needed at closing. You’re certainly on the right track. Best of luck on your first purchase!

@Joe A Warner . House hacking with FHA loan is how I started. It's a great strategy. Why not look for a 3 or 4 unit property? Once you buy a 2 unit you're unlikely to be able to make the jump to 3 or 4 units later if you want to do it again. More units has many benefits but also more responsibilities, something to consider.

The 3.5% FHA loan has a lot of benefits that are discussed at length on the forums and from having at least two dozen clients who have gone this route here are some of the common themes:

- the lower down payment allows them to buy in a better neighborhood than they could otherwise afford if they had to put 20-25% down.

- theoretically the better neighborhood is the managing of the property should be easier while you live in it and when you move out. 

- The ease of management/good tenant pool because of the area will allow you to grow your business with more of a clear head and not feel anchored down by a property that is day to day intensive.

- By living in the home you get an introduction to all aspects of landlording directly hands on. This will only help you in your investing career whether you choose to manage your own properties or outsource the management

- The 3.5% initial down payment should be recouped relatively quickly for you to deploy into other investments if you so choose

I would look for a 2-4 unit if it's affordable in your area. And you can get another FHA home loan after a year, so after that you can use the same strategy to purchase another multifamily!

@Joe A Warner

Hi Joe

I currently have my first duplex (first ever deal) under contract with a closing date December 27th.

I used an FHA loan and plan to rent by the room while living on the first floor (8 bed 4 bath total).

Sounds like we have similar goals! Feel free to message me as we both go through this process.

Zach Wright

I think it's a great idea. Just wanted to add that my offer on a duplex was accepted because other bidders were FHA and I was conventional. My realator's explanation was that the FHA inspectors will often require the seller to make repairs before approving the transaction.

Originally posted by @Zach Wright :

@Joe A Warner

Hi Joe

I currently have my first duplex (first ever deal) under contract with a closing date December 27th.

Did you face competition from conventional loan holders? Were there incidents of required repairs by inspectors?

Originally posted by @Bryden Rosenburgh:

I would look for a 2-4 unit if it's affordable in your area. And you can get another FHA home loan after a year, so after that you can use the same strategy to purchase another multifamily!

I am new to PB and RE investing but wondering ... you mean you can access another FHA loan after just a year on a current FHA loan?

When looking at the 3 and 4 unit complexes for an FHA loan, remember that they have to pass the self-sustainability test. This means that 75% of the projected net rental income from the units you don't plan to occupy must exceed the "full mortgage payment". This full payment also includes taxes, mortgage insurance, and hazard insurance. The projected rental income is derived from an FHA approved appraisal company. 

@JayCinta Henry I believe you are required to live in the FHA financed for at least 1 year. After that you can refinance with a different loan type and then do another FHA on a different property and live there. You can only have 1 FHA loan at a time and you have to live at the FHA financed property at last a year.

Hope that helps!


@Joe A Warner this is exactly what i did when i got started! except i rented rooms on my side too and just had a room to myself. this is an excellent way to buy a property. i highly recommend this! let me know how i can help. all i do is rent by the room now. happy to share any knowledge i have. 

Originally posted by @Joe A Warner :

@Austin Vawter When you say 75% of the “net” income needs to cover mortgage, I assume the “net” your talking about doesn’t include the mortgage already?

Also, thanks! I had no idea that was a thing with FHA loans.


You are correct. This "net" does not include the mortgage.