FHA or Conventional for Units

4 Replies

Hello everyone.

I am trying to buy a 2-4 unit and to live in one of the units and to count the other units rent are income. 

One lender told me he can account for 75% of the rent as my future income, but I have to put down 30% on a conventional.

I read somewhere on a FHA website that, FHA can finance up to 96.5% = (3.5% down). And FHA can use 90% of the rent as future income. If that's the case I can get well within the 41% DTI ratio.


I don't have any previous rent income to show on my taxes so I have no history (which banks like to see)

Any info would be greatly appreciated!


yes you can use fha and only need to put down 3.5% down and it's true that you can use 75% of gross income of the other units you're not living in to help you up qualify.

On fha sometimes you can go up to 85% of gross income (Orange County) but depends on your area fha has different factors for different areas.

There are also conventional my community programs that allow as low as 5% down up to 4 units as well.

Small private banks and credit unions might be worth a look if you can't go FHA. If they keep the loan "in house" they can do whatever they like vs. the FHA which have guide lines they have to follow such as, the roof has to have 3 years life left on it.

Hi Michael, 

Some of the rental income ( 75%) should count towards the future income. Contact me to let me know what bank you called on and I will send you info of some top lenders in Chicago that can get the loan done.

@Lumi Ispas Fannie Mae does not require 2 year landlord experience so it will be counted towards qualifying if the borrower can find a lender who sells direct to FNMA with no overlays (extra bank requirements).

I use rental income to qualify with FNMA for the last 2-3 years so no issues but Freddie Mac does in fact require 2 years landlord experience so the borrower has to make the bank they are going through is not a Freddie based lender or if the bank is willing to go with either Fannie or Freddie.

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