Can someone confirm the 85% gross rent rule for FHA loans?
I was told by my mortgage broker that in order for a property to qualify for an FHA loan, 85% of the gross market rent for all units in a 2/3/4-plex must be more than the PITI, otherwise they won't approve the loan.
In Oregon I'm having a diffcult time finding properties that meet this rule, especially for duplexes, where most of the time my maximum offer would be $50k-$100k lower than market price. 4-plexes tend to meet this a bit, but for the most part it's been really hard to find.
A listing agent for a duplex in town said that he has sold many multifamily properties to buyers using FHA loans and has never heard of the 85% rule and didn't know what I was talking about.
Can anyone confirm that the 85% gross rent rule is actually a thing, or am I just not understanding it correctly? I'm thinking that in order to find a property that meets the 85% rule it's probably going to be in a C class neighborhood because those are the places with more cash flow. Thoughts anyone?