Buying a Owner Occupied Triplex or FourPlex With an FHA Loan

It’s amazing that you can buy a 3 or 4 unit property with an FHA loan with 3.5% down if you occupy the property as your primary residence and the property meets certain requirements.  Buying a 3-4 unit property can be a great way for a home buyer to get started in real estate using an FHA loan.  Many times after collecting the rents from the other units that you rent out, your totally housing payment would be less than rent and less than if you bought a condo or a single-family-home.  Eventually you could move out of the 3-4 unit property and then keep it as an investment property, and eventually pay off the mortgage and have the cash flow income and equity build as an excellent investment for life.

In order to put the minimum 3.5% down using an FHA loan to buy a 3-4 unit property there are some special requirements you have to meet:

1. 85% of the current gross market rents for all 3 or 4 units must be equal or greater than the mortgage + property taxes + home insurance (PITI).  If rents are less than equal to PITI, then you will have to increase your down payment until equal or greater.

2. You have to have three months of PITI in cash reserves after your close on the purchase.

So let’s saying you are buying a 4 unit property for $400,000 and the market rent for each unit is $1,000.  The total gross income would be $4,000.  You multiply $4,000 X 85% to get $3,400/mo.  And then let’s say the PITI with 3.5% down on a $400,000 4 unit property with an FHA loan is $2,648.   So in this case it would work and you would only have to put 3.5% down to purchase the 4 unit property.

So the FHA loan is a great way to get started to purchase.  Remember you buy by April 30th 2010 (and close by June 30th 2010) you may be eligible for an $8,000 tax credit.  Here some highlights to remember about FHA loans:

  • Only 3.5% down required and those funds can be gifted from a relative
  • Low 30 year fixed interest rates
  • You don’t need perfect credit to apply for an FHA loan and be approved
  • The seller can credit you 6% for FHA closing costs
  • FHA has the most flexible qualifying guidelines of any loan available today

Give me a call (858-922-7899) or email ( if you have any questions at all about getting approved for a FHA Loan.

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer (and FHA specialist)



Leave a Reply