FHA loan additional requirements with triplex?

Question

I’ve found a few triplex’s in my area that make for great house hacks. I just got off the phone with my lender, and he said that FHA loans are generally difficult to do for 3 and 4 units, because the other units rental income (75% of actual income) need to cover the entire mortgage. He also said that very few banks give owner occupied loans on triplexes, so FHA is the only option already.

I’ve never come across this rule before. Is that all there is to it? Most of the properties I’ve looked at have had the other units cover the mortgage, but not when they make the 75% adjustment.

Philip Ganz · Answer

Account Closed The "Hack" to The Self Sufficiency test is to flip to an FHA 203k loan because then you can use "market" rents.

Melvin List · Answer

Account Closed yes the rule is called the "net self sufficiency test". Your lender saying very few banks give owner occupied loans on triplexes is a load of bullshit!

Lien Vuong · Answer

That self sufficient test is tough esp given the Boston area but there are some way you can mitigate it. I was able to purchase a property a few months ago under this program and it's cash flowing about $1200/month.

You want to target a property that is well maintained and in good condition even though they're getting less rents. You can make the argument that they rents are lower than market and have the agents provide the comps to the appraiser.

FHA loan additional requirements with triplex?

FHA loan additional requirements with triplex?

Most Popular Reply

4 Replies