House Hacking with a 203k Loan

[Joshua Randall]

If I were to purchase a Trip-Plex with the expectation of living in one of the units. Would I be able to use the 203k loan to rehab the property? I know it works for your basic single family home but will it work for a multi unit property? I feel like this would be an incredible way to use a financing tool for a value add property!

[Steve Schulman]

Hi @Joshua Randall. Yes- you can use an FHA 203k rehab loan for 1-4Fam. I highly recommend it, too.

Your only hurdle will be passing the self sufficiency test, which is for 3-4Fam units. 75% of market or current rents must be more than your PITI. Essentially, the bank uses a 25% vacancy rate; it's not ideal, but it is what it is.

Good thing is you will be able to use ARV rents per your 203k rehab. In some markets, your best and only way to get around this self sufficiency test is to find 3-4Fam that is highly, distressed and could use the value-add.