FHA Loan requirements for 4 plex

11 Replies

Hey all,

I've been listen to all the BP podcasts for quite some time now and have finally found a property that interests me. I have heard so much about using FHA loans as a means to have a lower down payment but when reaching out to lenders I found a snag. The property is a 4 plex that has a vacant unit that I would be moving into. It was my understanding that to qualify for this type of loan you need to be living on the property. However, the lender mentioned to me that you cannot rent out any of the units for the first year (in addition to be living on the property). I was not aware of this and was confused as it sounds like most investors on the podcasts rent to tenants immediately. Maybe I've been hearing something different but has anyone else come across this and what are some ways to get around it without taking a conventional loan for 20%+ down?


That's interesting, from what I know as well from talking to a reputable mortgage broker, lender do allow FHA loans with 3.5% down payments on residential Multi family properties as an owner occupant. I would Talk to other lenders and see what they say. I had to talk to a couple of different mortgage lenders before I purchased my first property. Hope that helps.


@Kevin Heiden , that doesn't sound right. Why would they want you to keep 3 units empty while you sit poor and angry in the 4th unit?

FHA does require that the property be owner-occupied.

Keep shopping around to other banks and concentrate on local/regional banks and credit unions.

@Kevin Heiden

You need to speak with a lender familiar with FHA Financing and Investors. You are required to live in one of the units and you can rent out the other 3 units. You can actually use the rental income from the other 3 units towards income to qualify for the mortgage. I am glad to send you more info on FHA Financing.

Hey Kevin, I bought a 4plex with a FHA loan last year. The only requirement they had was that I live in the property for 1 year. 2 of the units were rented and the other 2 were vacant. If I were you I would just rent them out after you buy the property. There must of been a misunderstanding on his part, they don't have FHA police to see who's renting what units. I wish you good luck on your first purchase.

@Jerry Padilla What documentation does the bank want to see as proof of rental income? Or do they just take market rent and apply it to your debt to income?

I'm using an FHA loan on a multi-family and will be living in one unit and inheriting two tenants. Maybe talk to a different lender. I've never heard of this.

@Troy H. It depends on if the property is rented out. They can use market rents if the unit is vacant or current lease agreements if the property is rented out. 

@Kevin Heiden , ideally, your own income would be sufficient by itself to qualify for an FHA-approved loan for a 4-plex (ie. who wouldn't want that amount of income?), but I agree with the others who have indicated that it is NOT an FHA requirement for the other 3 units to be vacant for a year while you're living in the other. Are you SURE that's what the Lender said? I believe the reverse is more likely to be true ie. The (3 or 4-plex) property must pass a "Self-sufficiency Test", meaning that YOUR income alone will NEVER be the only thing taken into consideration - from day one! My 2c.

@Kevin Heiden the lender was incorrect. You can rent out the other 3 units immediately. You will be allowed to use 75% of fair market rent (as determined by an appraiser) as qualifying income.

I am actually looking into this myself.. I hope you get that 4 plex..

Like everyone else is saying ask around to get facts

Good luck 

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