Using a FHA after a conventional loan

[Account Closed]

Morning everyone! I have a question in regards to acquiring an FHA loan. I am currently house-hacking a townhome in Phoenix Arizona that I intend on renting full time. I’ve lived here for 2 years, and used a conventional loan to get started. Now I’d like to use an FHA loan to house-hack a four-plex. Is this possible? What is the best course of action in getting into a Muti-family property?

[Andrew Postell]

@Account Closed yes, this is completely possible but there are a couple of details to know about with FHA loans when LEAVING your current primary residence as a rental in favor of another rental. First, as long as you purchase the next 4-plex and live in it, an FHA loan is totally fine. You can get "prequalified" from any lender that offers FHA loans to get this type of a loan. I would recommend to use a lender that will use the rental income to qualify you. Not every lender will do this unfortunately. So when interviewing lenders, ask the lender if they will use the rental income IMMEDIATELY to qualify you for the loan. Even if the other 3 units are vacant the answer should still be yes.

Secondly, it will be important to know if you need your current primary home rental income to qualify for the FHA loan. FHA does have a weird rule that states you CANNOT use rental income from a property you are vacating, unless you have 25% equity in the property. If you qualify without the rental income, then it doesn't matter what your equity is. But if you need that rental income, and need to prove you have 25% equity, you will need an appraisal on your current primary home to prove the amount of equity in order to be able to count that rental income. *WHEW* I know this is a lot of information so feel free to ask more questions if needed.

Thanks!