Issues with getting an FHA loan

[Stefan Demopoulos]

I currently live in Massachusetts and own a 2 bed 2 bath 1300 SqFt condo in Boston. I'm trying to house hack a triplex in Boston as my next venture. On the bp podcast and pretty much all over social media, house hacking is portrayed as very simple to get an FHA loan at 3.5%.

For some reason the lenders I've spoke to are making it seem like that's not the case and I wouldn't qualify with some of the triplex's I'm looking to live in 1 unit and rent the other two units. I'm also looking to rent my south Boston unit as well that I'm currently living in when I can get into a triplex. I've researched all of the FHA guidelines like credit score, dti ratio, house quality, county FHA cost limits, etc and I'm good in all of those areas. Do you know why people are telling me the FHA wouldn't work in my case?

[Jay Hurst]

Quote from @Stefan Demopoulos:

Hi Cassi, 

Thanks for the quick reply! The specific place is in very good condition. The last convo I had with a lender said I won't get approved if I move from my currently condo 2 bed 2 bath 1300 sq ft into something smaller / downsize. Aka if the unit im moving into was say a 1 bed 1 bath and 700 sq ft. Have you heard of something like that?

Thanks! 

@Stefan Demopoulos

The FHA self-sufficiency test for 3-4 units is almost impossible to pass with only 3.5% down with today's prices and interest rates. The test is that 75% of the total rent of the 3 units cover your total Prin/int/taxes/homeowners insurance/mortgage insurance. So, if the total rent as determined by an appraiser is 6000, you enture payment would need to be under 4500.

This does NOT apply to 2 unit which makes a 2 unit properties much easier to buy wityh a 3.5% min down payment.