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Are you planning to buy a multifamily home with four units? Then, you would be happy to know that you can use an FHA-insured mortgage loan to buy the property. But you have to meet certain key requirements for this. One of the primes of them is with the owner occupancy. The person purchasing the house should live in one unit, to use an FHA loan to purchase a multifamily home. Besides, the homebuyer should make a down payment of at least 3.5% of the buying price or appraised value.
If you meet the minimum eligibility criteria for the program and plan to live in the property, then you can get an FHA Loan for multifamily 4 units with a 3.5% down payment. To get a clear view consider this real-life example, where a house was sold on 12/13/2019 at 3714 Gager St, Houston, TX 77093 for $450,000 & with 6 bedrooms and 6 bathrooms and the total size of the MultiFamily of 4 Units home is 3,564 Sq Ft. With FHA Loan Multifamily 4 Units, the down payment would be only 3.5% or $15,750 and the loan amount is $258,138 and the cash to close including closing costs could be $12,009.01.
- Meet the credit score requirement
The minimum credit score requirements for FHA borrowers to buy a multifamily 4 units home is the same for those purchasing a duplex or a “regular” single-family home. According to the current HUD guidelines, borrowers using this program to purchase a house should have a credit score of 500 or higher than that. But to qualify for an FHA loan with a 3.5% down payment, borrowers should have a credit score higher than 500. But you should keep this in mind that mortgage lenders can set their own requirements on top of the minimum guidelines used by HUD. This is why the credit requirements vary from one mortgage lender to another one. So, it would be better for you to ask for quotes from various FHA-approved mortgage lenders, compare them, and then go for the one, who will be the right fit for you.
- Know the loan limits
The Federal Housing Administration home loan program has limits to how much actually you can borrow. These limits change by country as they depend on median home prices that also vary by location. There are diverse FHA loan limits for single-family and duplex-style properties. In fact, there are a total of four limits for each country, including one-family property or single-family home, two-family property or duplex, three-family property or triplex, and four-family home. Homes with more than four units are considered commercial real estate and are generally not eligible for FHA mortgage financing. It is crucial to make yourself eligible with these limits, as they affect your borrowing capacity when using an FHA loan to purchase a style home.
These are the general things that you need to know before applying for an FHA loan for multifamily 4 units. Do you have any other doubts or confusion that you want to be cleared? Get in touch with your local mortgage lender, clarify it and then apply for the loan program.