FHA Loans - What you need to know about 3 & 4 unit properties - Purchase or refinance - FHA Home Loans

Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc


FHA Home Loans – Borrower beware of your lender when buying or refinancing 3 Unit & 4 Unit properties

fha loans & fha home loans & fha mortgages

FHA Loan requirements have been changing all across the board in the last 18 months.  When it comes to FHA loans for a borrower trying to purchase or refinance a triplex (3 unit) or a quad (4 unit), there are some important requirements that have changed.

This is based on my 2nd borrower as in many as 10 days that was not given proper information on residential properties that are 3 or 4 units.



For all maximum mortgage amounts on FHA Loans, regardless of the number of units. - FHA mortgage amount limits - Showing 1 family (single family units), 2 family, 3 family, & 4 family



Important things to know with multi unit properties with a FHA Loan


2 Unit Properties - Duplexes

Buying or refinancing a duplex with a FHA loan follows the same guidelines as it does for a single family dwelling.  The only difference is that one of the units must be your primary residence and you can only use 75% of the rental income to help you qualify for that property.


3 Unit & 4 Unit Properties

This property still must be your primary residence, meaning that you must live in one of the units.  The good news is that you still only need 3.5% down on the FHA mortgage.  On a conventional loan, there are LTV restrictions and even pricing hit adjustments for the worse when it's a 2 to 4 unit. Some other restrictions or guidelines for 3 to 4 units with a FHA loan.


  • Self-Sufficiency Test - The borrower must meet this test for either a purchase or a refinance. The test states this :

Gross rents less the vacancy factor for all units, including the owner-occupied unit, must be => the PITI for the subject property. The Vacancy Factor is explained here : FHA Vacancy Factor

In layman's terms, the total rents must be the same or greater of the total monthly mortgage payment, to include taxes, homeowners insurance, and the mortgage insurance. These rents must be determined by a FHA certified appraiser. Meaning that you can't use rental leases for this specific test. Self-Sufficiency Test info found in HUD 4155.1  2.B.4


  • Rental Income to qualify - You still need to also qualify with the normal debt-to-income ratios in regards to your income, in which you can use the rental income. But you can only use 75% of the rental income for the purpose of this qualification.  As the primary borrower, you can't use what you would pay for that unit as rent to offset your mortgage. All you are including in order to qualify is your monthly gross income.


  • Reserves - When buying a 3 or 4 unit, you must have 3 months PITI in reserves. These reserves can't come from a gift. HUD 4155.1 Mortgage Credit Analysis - You do not need any reserves for a refinance.



Summary :  These are normal HUD guidelines for FHA loans.  Keep in mind that some investors and or lenders might have investor overlays, meaning that they can add to these basic guidelines. And what inspired me to write this post today was because of a borrower that contacted me and what she wasn't told. She wasn't aware or told that she needed 3 months in reserves when trying to buy her current property. She needs to close in 30 days, yet she would have needed $9,372 after closing, as reserves. She said that she wouldn't have this for another 4 months or so. So as you can see, this loan would have never closed in the next 30 days with the previous lender because the loan officer didn't know the basics.  Buyer beware.


KEY FOOTNOTE - You can't use a FHA mortgage to buy any type of property as an investment property.  And for first time homebuyers, this is a great way to have someone help with your mortgage payment and to help build equity... by buying a 2 to 4 unit property.


Important Reminder – It’s cheaper to purchase a 3 unit or a 4 unit with a FHA Mortgage than with a conventional mortgage for several reasons, even if you have 700 + credit scores. Speak to an FHA Expert to find out these differences.






follow Jeff Belonger on Twitter               The FHA Expert     

                                                                                           FOLLOW ME ON FACEBOOK



- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -


Experience & Knowledge at its BEST !!!




For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!




Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Posted by




follow Jeff Belonger on Twitter


The FHA Expert's fan page on Facebook     Add Jeff Belonger to your network @ LinkedIN

                                                                            FOLLOW ME ON FACEBOOK



- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -


Experience & Knowledge at its BEST !!!



Follow me on:

Mortgage Myth Busters



For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!



For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors


Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc


Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. William J. Archambault, Jr. 02/12/2010 02:54 AM
  2. Broker Nick 02/12/2010 03:04 AM
  3. Bridget Cella 02/12/2010 06:47 AM
  4. Bonnie Vaughan 02/14/2010 03:08 AM
Lending / Financial
New Jersey Middlesex County East Brunswick
1st Time Buyers
All About Mortgages/Mortgage Networking
The FHA Mortgage Group
fha loans
3 unit properites
4 unit properties
fha home loans
fha mortgages
fha 3 unit properties
fha duplexes

Spam prevention
Show All Comments
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Very interesting.  I didn't realize that the home owner could buy as a homeowner occupant of one of the units and then subsequently rent that unit. 

It makes sense.

Feb 11, 2010 07:55 AM #1
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks Jeff, excellent info.  Some new facts I wasn't completely clear on.

Feb 11, 2010 11:12 PM #2
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX


This article is must reading!

I'm a big supporter of 2, 3, and 4 unit properties for first time home buyers! Brenda and I bought our first duplex in February of 1971 just before we were married. Three of our first four properties were duplexes. More than half my sales the first two years in real estate were 2 to 4 units.

My first development consulting project was to help a builder get financing for a subdivision of 4 plexis. The builder couldn't get a construction loan. My solution was to get the project approved FHA and VA, then presenting a marketing plan for selling to young veterans. We built in closing cost and using VA a vet could close with no money out of pocket. Non-vet's need 3% down. The bank financed the construction and we sold out shortly after the frist units were finished.



Feb 12, 2010 02:58 AM #3
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans


LENN.... . yes, ... and this is a great thing for first time homebuyers, to help with that mortgage payment and to build equity at the same time. thanks

GABE... .  my pleasure and as always, thanks for your support.

WILLIAM....  first off, thanks for re-blogging this one.  And yes, I have always been a big supporter of 2 to 4 unit properties for first time homebuyers.  What a great way to get someone else to help you pay for your mortgage and to help you build equity. Great detailed comment.. thanks


Feb 12, 2010 01:03 PM #4
Jay-Paul Lowry
Riverside, CA

This is such a different product, although the guidelines are not too much to master. Still though you could make quite a good little niche out of this.



Feb 14, 2010 09:57 AM #5
Marcia Kramarz
Re/Max Executive Realty - Medway, MA

This was helpful - I'm researching though the effect of these laws on a condex / duplex sale - Wondering if FHA is even possible on those 2 unit condos

Oct 17, 2010 02:36 AM #6

This self sufficient test makes it impossilbe to buy a three family in states like NY with FHA. A 3 family is at least $600k ,  your PITI would be about $4500.  Rent would be about $1500/unit that is $4500 less 25% vacancy factor that is equal to a rental income of $3375/month. But you needed $4500 to meet the self sufficient test.... now this test is impossible for NY and silar states. This is the government with rules that don't make sense. No wonder why the economy is crashing...

Jun 08, 2011 06:51 AM #7
Jennifer Chiongbian
Specializing in all types of Manhattan apts & townhouses - Manhattan, NY
Real Estate Broker - NYC

Thanks for those great tips!  I know nothing about FHA financing for a multi-families.

I love learning about all the lending changes to keep me shar pin my business.

Jan 20, 2012 02:15 AM #8

I have a question. I would like to buy a multifamily unit. It is 4 units, but being deeded as 1 unit. So when qualifying for the loan, will it be treated at rental property or a single family home? If it is treated as rental property, will it be considered 4 units or 1 unit? It is one building with 4 townhomes attached. Also, why do you considered multi unit homes as a great option for first time buyers? Thanks

Nov 24, 2012 12:46 AM #9

Im trying to close on a fha 4 family right now. The lender said I needed a 620 but he later said I needed a 640. Does fha require a 640 for 4 family?

Apr 13, 2015 01:34 PM #10
Christopher Miles

Good day to you all of you my name is Christopher Miles, I'm from USA, Texas, am very happy as am writing the testimony how i got my loan from this loan lender, i believe God has a plan for me, after i was been scammed of my money by many so called loan lenders, i was deceived and almost thought of taking my life, but God has a purpose for me, if you want to get a loan from any company you have to chose Mike Johnson Firm, when i was first started with him, i thought he was like the rest, and to my Greatest surprise i got the loan of $69,000.00 in my account and that was the Exact amount i applied for in his company, and you that is feeling that there no hope for you? is a lie because if you are interested in getting any type of loan, you can contact him via email, his email is: mikejohnsonfirm@yahoo.com, God Bless you like he blessed me with Mr Mike Johnson by getting my loan after been falling in the hands of scams.

Christopher Miles.

Aug 29, 2016 07:31 AM #12
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Jeff Belonger

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans
Ask me a question

Additional Information