Can I purchase a four-plex for $2M using FHA 203(k) loan?

Question

This is my first post on BP, I'm excited to join this community!

My wife and I have been looking into buying a multi-family four-plex that is currently listed for a little over $2 million. We would like to purchase the property and add a second story to the main building and rent out the other three units.

I've done some research on FHA 203(k) loans for my specific location here in San Diego, in regards to the maximum loan amount for that loan -- I've seen $1,209,750 quoted as the max for a SFR, but the max on a four-family property can be up to $2,326,875. Does anyone know enough about FHA 203(k) loans to tell me if these numbers are correct??

Stephanie Medellin · Answer

Hi Mike, welcome to the community! The maximum FHA loan amount for San Diego county is $2,072,250. The numbers you're seeing are for the maximum loan amounts nationwide, which only apply to the highest cost counties. You would think that San Diego county falls into that category, but the loan limits there are just slightly under.

Here are the FHA loan limits for San Diego County in 2025:

SFR 2-Unit 3-Unit 4-Unit

$1,077,550

$1,379,450

$1,667,450

$2,072,250

When you're doing a renovation loan like 203(k), the loan limit is the max, inclusive of any renovation costs that you're financing. If the purchase + renovations are over the limit, you would just bring the rest to closing from your own funds.

Keep in mind for 3-4 units on FHA, the property must meet a self-sufficiency test. This means that 75% of the rental income on all units must cover the monthly principal, interest, property tax, and insurance payment. It can be hard to meet this requirement in some higher cost areas.

I'd be happy to talk further and go over some numbers. I have several options available for 203(k) loans.

Stephanie Medellin · Answer

The way around the self-sufficiency test is a conventional loan with 5% down, which doesn't have this requirement. 5% down is for owner occupied properties only (just like FHA). We have conventional renovation loans too.

However, the loan limits for this option will be lower than FHA. Again, these are effective for San Diego County 2025:

• 2-unit property – $1,032,650
• 3-unit property – $1,248,150
• 4-unit property – $1,551,250

This means you could buy a 4-unit property worth $1,632,984 and put 5% down to reach the maximum loan amount of $1,551,250.

If you buy a property in need of renovations, the cost of renovations being financed must still fit within this maximum loan amount. The value will be based on the lesser of:

purchase price + renovations

-OR-

as completed value.

The appraiser will look at your plans or scope of work, and appraise the property as if the work has been completed. As always, the comps need to support the higher value, so you can't over-improve for the neighborhood with a renovation loan.

Here's an example:

Buy a $1.2 million dollar 4-plex in need of updating.

Each unit needs $100,000 of renovations, bringing your total to $1.6 million. Comparable 4-units are selling for $1.7 million, so your value is supported.

You would bring 5% down, using the lower $1.6 million value. That's $80,000. Your $1,520,000 loan amount is under the limit. All other qualification criteria still need to be met (income, credit, etc.)

Terry Fann · Answer

OK would love to help or answer any further questions you may have. If you find another property and what me to run some numbers for you just reach out anytime. Good luck!

Deven Ziertman · Answer

You can buy a four-plex with an FHA 203(k) loan if it’s within the local loan limit (around $2,072,250 in San Diego). I’ve been through this before—DM me and I can share how I did it!

Rodrigo Serzedello · Answer

Hey @Mike Finstad! Fellow San Diegan here as well.

Just a quick heads-up—if you’re planning medium to high renovation spending, I’d recommend adding at least a 10%+ buffer to your budget and cost forecasts. With today’s announcement from Trump about increased tariffs on imports from several countries, construction materials—which already rely heavily on imported goods like steel, lumber, electrical components, and fixtures—could see noticeable price hikes in the near future.

It’s a good time to stay ahead by adjusting your numbers now before those costs hit your bottom line. Let me know if you want to chat more about it or compare notes!

Jonathan Klemm · Answer

Hey @mike @Mike Finstad - You got some great information above from @Stephanie Medellin; I just wanted to say that you are on the right path!

I agree; even if the 203k loan doesn't work, consider the conventional path with the homestyle renovation loan.

We do a bunch of both loan types here in Chicago, and when executed well with the right team those renovation loans offer an AMAZING BOOST OF EQUITY!

I highly recommend building a team (Lender, contractor, agent, HUD consultant) that has done them before, though - they are tricky on the paperwork and timeline!

Matthew Porcaro · Answer

Hi Mike - so the 203k will fall within those loan limits. For instance, if you bought a property for $2,000,000, you'd have $326,875 left for renovations.

Essentially, both the purchase price + the renovation costs & contingency have to fall within the umbrella of the loan limit, or whatever you're approved for, whichever is lower.

As some other people mentioned, self-sufficiency test will be what you're up against on a quadplex.

Now, I've had many clients that buy fixer upper quadplexes using the 203k or used the 203k to add bedrooms/bathrooms to each unit to boost the potential rental income, and in those instances they were able to get the proeprty to become self sufficient.

Buying distressed multifamily is the only way to make house hacking and FHA work in my opinion since you are giving yourself the best chance getting in at a lower cost basis, building value on the purchase and upgrade, rather than looking for a unicorn of a move in ready quadplex that meets self sufficiency.

Bill B. · Answer

I want to add a quick question to the OP’s question. He said he was going to add on a second floor. I assume he would add more units on that floor and convert teh4plex to a 5-8 unit building. Would he be allowed to keep his residential loan with what is now an 8 unit building? It would certainly make selling harder and maybe lower the value. But would he be ok until then?

Mike Finstad · Answer

Thanks for the reply @Terry Fann! We ended up passing on this property for now, but I will reach out when we settle on something else to see if we can make something work!

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