Purchasing first multi-family house. How will it be zoned?

Question

Hello all, I am currently in the process of purchasing my first eve multi-family home. I have been approved for financing with an FHA loan but my banker made the point that FHA is ONLY allowed for 2-unit homes. This house was forclosed on and it appears that the previous owner was in the process of making it a 3-unit home. He/She never finished and I was wondering how this would be zoned by the city. Do I have an option of zoning at as a 2-unit because the thrid unit is only half finished? Can I turn it into 3-unit over time? I am not sure how the zoning process works and I guess it depends on the city but any help from someone who has experience purchasing these types of properties will be much appreciated!

Edward A. · Answer

You can use FHA for up to a 4 unit property. If your banker is saying only 2, then that's most likely their own guidelines. I would call other bankers in your area for their protocols with FHA.

Jeff B. · Answer

The City already has it zone per their rules.  You better check to see what the current zoning IS and what that means to you.

Ned Carey · Answer

First of all I am not sure it is correct to say FHA will only finance a 2 unit property.

Next  Zoning probably does not matter. Zoning often provides a range of what  can be done with a property. A particular zoning may allow 1 to 4 units  for example. How many units are on a particular piece of property  within the zoning range may vary.

If you property has 2 units, then the fact that up to 3 units is allowed shouldn't matter. It is still only two units.

Now if it is 2 units but is only zoned for 1, now you have a problem.