Investor · Brighton, MI · Member since 2014 · 85 posts · 20 votes
Can a boarding house qualify for FHA financing if it's considered a residential property? There is 11 bedrooms all rent for $400. The only concern is the property was built in 1850.
Purchase price $150,000
FHA loan
Rent: $4,400
Vacancies 10%: $440
Maint 15%: $660
Capex 15%: $660
Property mgt 10%: $440 (plan to manage myself)
Insurance: $166
Taxes: $375
P&I: $867
Cashflow: without mgt: $1232
With mgt: $792
Must be a 1-4 family dwelling. Age isn't relevant. Just has to be insurable.
FHA won't cover a loan for any commercial enterprise (5 family plus, or other commercial operations). It will not approve an FHA mortgage for boarding houses or hotels (tourist dwellings, bed and breakfast, etc.).