Keys to Qualify FHA Loan on 2-4 Units Owner Occupied in California

FHA has wonderfully flexible and lenient guidelines that allow home buyers in California to get FHA loan to buy a 2-4 unit property as an owner occupant.  If you buy a duplex, triplex or fourplex and live in one unit and rent the others, you can buy the property with the low FHA loan down payment of 3.5% and also get today’s record low FHA loan interest rates.  Whereas an investor who buys a 2-4 unit property as an investment property they will not live in has to put 25% down and have much tougher loan qualifications and not quite as good interest rates.  So there are some huge advantages to buying a duplex, triplex or fourplex with FHA financing.

Now here are some of the keys to keep in mind when get FHA loan to buy a 2-4 unit.  First of all, if you a buying a 2 unit duplex property, there is no difference to the FHA loan approval qualifications of a condo or single family home.  You just need the minimum FHA loan down payment of 3.5% down (and that can be a gift from a relative), a 620 credit score and all of the other standard qualifications.  But with a 3-4 unit building there is an extra twist to qualifying for FHA financing.  With a 3-4 unit building, the total market rents of all the units (including the one you will live in) must be equal to or greater than the principle and interest of the loan + monthly property taxes + month home insurance (otherwise known as PITI).   If the total rents do not equal the PITI, then you must increase your down payment until they do equal the PITI.

Also keep in mind a real big advantage to buying a 2-4 unit property with an FHA loan is that you can use the rents from the units you don’t occupy as income to help you qualify for the loan. 

It can be a very financially smart thing for a home buyer to buy a 2-4 unit property:

  1. They can one day move out of the property and retain the property as a investment property for cash flow, appreciation and tax benefits
  2. If they plan to stay in the property, as time goes on the other units you do not occupy rents will rise eventually paying for 100% of the expense of owning the property allow you to essentially live for free
  3. In expensive areas of California such as San Francisco, San Jose, Los Angeles, Orange County, San Diego and Santa Barbara where single-family homes have would be too high of a housing payment, owning a 2-4 unit can allow you to make ownership more affordable because you can collect the rents of the units you do not occupy 

So please give me a call or send me an email if you are buying a 2-4 unit property with an FHA loan and/or would like to be approved for an FHA loan to buy one.

Here are some reminders about some of the benefits of buying you home with FHA loan in California or a conventional loan:

  • FHA loan credit score does not have to be perfect, a 620 score can get you excellent FHA loan interest rates in California
  • Maximum FHA loan in California is $729,750.  Many counties and cities in California such as San Diego, Los Angeles, Orange, San Jose, and San Francisco allow you to go all the way up to $729,750 with just 3.5% FHA down payment
  • FHA loan vs conventional loan…FHA requires only 3.5% down payment, allows lower credit scores and higher debt-to-income ratios.  Conventional can be had with 5% down, no up front mortgage insurance but had much higher credit score and debt-to-income ratio standards
  • FHA loan down payment minimum is only 3.5% and can be a gift from a relative
  • FHA loan interest rates are STILL close to record historical lows!
  • Conventional loan offer the Fannie Mae Homepath loan with as little as 3% down and no appraisal needed, see my earlier article about Homepath  (

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

Warmest Regards,

Rob Chomentowski

Sr. Loan Officer



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