Buying a 2-4 Unit Home using an FHA Mortgage

mortgageporter-seattle-duplexEDITORS NOTE: This post was written in 2013. FHA loan limits have changed as well as the interest rates posted below. Please see the bottom of this web page for current FHA loan limits. If I can provide you with a current rate quote for your home in Washington, please click here.

If you are considering buying a duplex, triplex or fourplex and you’re going to live in one of the units, FHA is a possible mortgage option.

FHA allows for a low down payment of 3.5% (soon to be 5% for FHA jumbos) and is more flexible with credit scores than conventional financing. Just like 1-unit FHA financing, gift funds are allowed towards down payment and closing cost. Sellers can contribute towards bona fide closing cost and not the down payment.

Home buyers should plan on having at least three months reserves (proposed total mortgage payments) in savings for reserves. The reserves can be retirement funds or stocks and bonds.

Buyers may also receive a credit of the monthly rental income to help with qualifying. NOTE: the amount of rent credit will depend on what the current vacancy factor is for the area. Borrowers can plan roughly 75%. In the Seattle area, 85% of the rental income may be used.

Here are the 2013 loan limits for 2-4 units in the Seattle – King County area:

Duplex: $726,500
Triplex: $878,150
Fourplex: $1,091,351

Mortgage rates for FHA 2-4 unit properties are competitive with single family FHA as is FHA’s upfront and annual mortgage insurance (paid in the monthly mortgage payment).

As of this morning, January 31, 2013, for a 3-4 unit property with a sales price of $600,000 and 5% down payment, I’m quoting:

NOTE: Rates posted below are expired! For a current mortgage rate quote for your home located anywhere in Washington state, please click here.

FHA 30 year fixed: 3.250% (apr 4.081)  Most of the closing cost and some of the prepaids are covered with current pricing offering a rebate rate credit of 0.780%.

PIMI payment = $3088.89 (PIMI = principal, interest and mortgage insurance. Property taxes and home owners insurance are additional). Remember, the home buyer will need three months of their proposed mortgage payment in reserves, which is $9,267 for this scenario.

Click here for your FHA mortgage rate quote for homes located anywhere in Washington state.

This is a great way to buy your first investment propertyas long as you live in it for 12 months after closing.

If you are considering buying or refinancing a home located anywhere in Washington state, please contact me.


  1. Can I still buy a duplex with FHA with no intent to rent out? Use as a family home but one for me and one for my mom?

  2. CharlesB says

    Did FHA change the requirements to purchase a Triplex or Quad last year when they changed the PMI terms? Someone told me that you now have to have rental experience when buying anything more than a duplex. Is this accurate? I couldn’t find any reference online. Thanks,

  3. John Egger says

    Hey Rhonda, Do you know if HUD will allow you to use gift funds for the down payment only on an FHA loan for 3-4 unit? I know you have to be personally responsible for the three months of reserves. Have you had any personal experience with these types of scenarios?



    • John, per the guidelines, the borrower must have 3 months reserves that are their personal funds (not a gift) with a 3-4 plex. I’m not seeing where in the guidelines that it states the down payment cannot be a gift.

  4. Michael S. says

    Hello, I was curious with the strict fha inspection process, if I did want a 4 unit building, does all 4 units and the outside structure need to be 100% fha inspection compliant? I mean what if the building is solid etc. 1 unit or 2 will pass a inspection but the other units need work? Can I still get a fha loan and just slowly fix the other units as I live in one unit because it passed the inspection? Thank you!

    • Michael, the entire property (all units) must meet FHA guidelines. I don’t find that FHA guidelines are more strict (at least not that much more) than conventional guidelines.

  5. If I am looking to buy land that has two houses on it could I still get a FHA loan?


  1. […] If you are getting ready to buy your first home, did you know that you can buy a 2-4 unit property (duplex – fourplex) using an FHA insured mortgage…  You DO have to occupy one of the units. Financing a duplex is very similar to buying a 1-unit […]

  2. […] If you are getting ready to buy your first home, did you know that you can buy a 2-4 unit property (duplex – fourplex) using an FHA insured mo…  You DO have to occupy one of the units. Financing a duplex is very similar to buying a 1-unit […]

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