How to go about using an FHA on fully occupied duplex or triplex?

Question

I want to buy a duplex or triplex. I am running into properties that are fully occupied. Some are with leases and others month to month. I believe I have a 60 days to move in per FHA requirement. I'm sure this issue is common amongst newbie's like myself.

Jaysen Medhurst · Answer

Happens all the time, @David Rivera. In your offer/contract you can stipulate that one of the units needs to be delivered vacant. That's the easiest way, since it's on the seller to sort it out. Alternatively, you can ask the seller to give notice prior to closing to the MtM tenant or, depending on the timing, the one with the lease. That way you should be able to move in within the 60 days. One thing you have to consider is that some states have rules in place during the pandemic that may not allow notice to be served.

BTW: If you qualify, look into a low-down payment conventional loan instead of FHA. Less paperwork, no up-front PMI, and monthly PMI automatically drops once you hit 78-80% LTV.

Ryan Twombly · Answer

Hi David, I agree with Jasen, even with Covid I don't think this would be a big showstopper. Even though there is an eviction freeze in CT, most tenants are still reasonable people and don't want an eviction filed on their record. I am currently househacking a 3-family in Middletown, let me know if you have any questions about the process. To Jaysens point, I used a 5% down CHFA loan vs the traditional HFA for this property. While there is a slightly higher down payment, the loan is a lot cheaper in the long run.

-Ryan

David Rivera · Answer

@Jaysen Medhurst Thanks for your response. Your advice is much appreciated. Trying to google search this question has been a pain. I've been looking in the Hartford county area. I wonder if there is allotted time added to move in because of Covid-19. Probably not.