You can get an FHA loan on a property between 1-4 units; owner occupancy is required though. Downpayment can be as low as 3.5% and they will use either the lease agreement rents or 75% of average rents for the vacant units + your income to verify your ability to cover debt repayment. We used FHA to purchase our duplex in South LA. You will need to have some cash reserves to cover a certain number of P&I/tax/insurance/PMI payments (I believe 6 months but double check with a lender). If you do put down less than 20%, you are possibly subject to PMI depending on LTV however you can refinance out of the PMI later on when/if your property appreciates in value enough or your loan balance decreases enough. Hope this helps
I was recently looking for a multifamily in LA myself. I decided against it only because I kept getting priced out with much higher offers and a ton of properties in Los Angeles have rent control. I was going to do FHA as well. They will do up to 4 units. I believe the max loan out here for FHA is around 700k or so. Or thats what I was told at least. Be careful with that 3.5% down though. When I got pre-approved and was shown numbers on the loan, there was an Up front Mortgage Insurance Premium, which all the FHA loans will have if you are not putting down 20%. So for LA properties, it will probably be at least $5-$15K more. They will roll that into the loan though but with those numbers we just decided to do 5% conventional. After searching for 6 months we have decided to invest out of state. But wishing you more luck than we had.
Yes, if you are getting an FHA loan, I've also heard that it has to be a single family home.
Here's some info I just found on "FHA-type" multifamily loans, but they all say they require 15% down and it limits you to around $60k per unit, which is not going to get you anything in Southern California. That's only from about 2 minutes of reading though... My mortgage broker works a lot of magic though and he could definitely answer all your questions. His name is Justin Roberts https://www.zillow.com/lender-profile/C2%20Financial%20Corp/
I have a 4-plex in San Diego that I got with a VA loan and I'm currently paying ~$1700/month of the ~$5000 mortgage. I live in the biggest unit (2BR/2bath, 1200sf standalone house) and rent out 3 1BR apartments in the back of the lot. For San Diego, that's much less than I would end up paying for a house without rental units, so it's not a true hack, but I'm still happy with it financially. Good luck finding a hack!
I am not a lender however my lender was very quick to answer my questions regarding FHA. I know for certain it doesn't have to be SFH. I believe you can use FHA on up to a 4-plex. FHA is an owner-occupied loan so you would have to "live-in" the property for just 1 year, however not every investor does that legally (not saying you should or shouldn't). You also have to meet a self-sufficiency test, which are strict regulations regarding what the property looks like and how you will pay for the property if not all units are occupied. Talking to a lender is totally free, and I would ask about their debt-coverage ratio on the self-sufficiency test. On 2 units I believe you don't have to meet a debt-coverage ratio.
If you plan on rehabbing the place and it is run-down you may not even qualify for FHA. You will have to pay mortgage insurance (PMI) until you can get up to 20% equity on the property. It's a great way to get started, but it's not as easy as a conventional loan. I used a program called home-possible and you put 5% down, with a lower PMI than FHA. You can message me if you want my lender's information, I hope this helps.
You can get an FHA loan on a property between 1-4 units; owner occupancy is required though. Downpayment can be as low as 3.5% and they will use either the lease agreement rents or 75% of average rents for the vacant units + your income to verify your ability to cover debt repayment. We used FHA to purchase our duplex in South LA. You will need to have some cash reserves to cover a certain number of P&I/tax/insurance/PMI payments (I believe 6 months but double check with a lender). If you do put down less than 20%, you are possibly subject to PMI depending on LTV however you can refinance out of the PMI later on when/if your property appreciates in value enough or your loan balance decreases enough. Hope this helps
Great point @KJ L. @Monica McDowell the self sufficiency test only applies to 3-4 unit properties. FHA County limits for LA exceed 1 million, I have sold quads over 1 mill in LA City. Many lenders have 3-5% conventional loan programs that have lower fees than FHA and if your offer/terms are the same agents prefer conventional over FHA due to their being less restrictions such as the 90 day flip rule etc.