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How to buy a multifamily property with FHA. Tips to consider

Thanks to FHA loans, people can buy a home even if they have a low down payment, a low credit score, or any other financial problem. But how to buy a multifamily property with FHA? And is it even possible? Let’s figure it out.

FHA loan — what is it?

The Federal Housing Administration issues the FHA loan, which works with trusted lenders. Most of these lenders are banks. The FHA Loan Program helps people with low or moderate incomes fulfill their dream of buying a home. Often this opportunity is used by homebuyers for the first time — they can buy a property with a down payment of only 3.5%.

How to buy a multifamily property with FHA?

You can use an FHA loan to buy a multifamily property, but there are a few quirks. To begin with, it is worth defining what an multifamily building is — this is real estate where more than one family can live.

Multifamily buildings are:

  • Residential buildings
  • Condominiums
  • Duplexes
  • Student housing
  • Mixed Use Property

The main requirement for applying for an FHA loan is that you plan to purchase a primary home.

Therefore, the requirements for the purchase of multifamily real estate under the FHA are as follows:

  • You must have lived in this property for at least one year
  • The property must be your primary residence
  • An apartment building can have up to four residential apartments
  • Property must comply with FHA standards
  • Also, the bank will consider your debt-to-income ratio and previous rental experience.

The main challenge you face if you plan to buy a multifamily property on an FHA loan is to convince lenders to consider potential rental income. And include this parameter in the debt-to-income ratio.

If you are wondering how to buy a multifamily property with FHA, please consult mortgage experts. At LBC Mortgage, we have been helping borrowers find the perfect financing for their needs for 15 years and make their dream of buying a property come true.

Multifamily properties on an FHA loan will meet the same standards as regular residences. Also, we advise you to put in your budget in advance the costs of paying for the house assessment, repairs, and any real estate inspections. Remember that lender requirements may vary, especially for those who plan to become a landlord after the loan is closed.

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