Using FHA to buy a second investment property

[L. Brown]

Hey BP,

I bought my first 2-family home (owner occupied) in August 2020 with a conventional loan. I am working on buying another multi-family (2-4 unit, owner occupied). I spoke to the lender I used to buy my current property about buying another property and he said the following:

"For a conventional loan the minimum down payment for a 4 family is 20% vs 15% for a 2 family. Since you already own a 2 family it will be very difficult to buy another multi family using a FHA loan since FHA has a guideline that does not allow the program to be used to acquire additional investment properties."

One of the reasons I went with the conventional loan is so that could keep the FHA in my back pocket if I wanted a home I wanted to put a lower down payment on. Is he correct that I can't use the FHA loan to buy my second investment property?

[Andrew Garcia]

Hi @L. Brown, you can use the FHA loan if you are occupying one of the units as your principal residence.

If you are living in one unit and renting out the other unit, then it is considered a primary residence loan, not an investment property loan.

The lender that you are currently working with might not be super well educated on the guidelines.

Hope this helps! Let me know if I can be of any assistance.