FHA 203(b) Loans for 2-4 Unit Properties
Ever wanted to purchase a home and have someone else pay your mortgage? Well, with an 203(b) loan, you can. FHA 203(b) loans are available for eligible properties with between two and four units. This means that you can purchase a duplex, triplex, or even a quadplex with a 203b loan and rent the remaining 1-3 units to other tenants.
Requirements for FHA 203(b) Multifamily Properties
If you have your eye on a 2-4 unit property that you’d like to purchase with a 203(b) loan, you’ll want to make sure that it’s eligible for FHA financing. In order to qualify, a property must:
Be legally classified as a multiunit property (this should be reflected by county or other local records)
All units generally must have separate entrances, bathrooms, kitchens, and utility metering
For single-family homes that have been converted to 2-4 unit properties, changes must be legal (and should also be on file with the county)
Spare rooms and basements with kitchenettes are generally not eligible
Plus, it’s essential that you live in one of the property’s units, and count it as your primary residence— otherwise, the property will not be eligible for an FHA loan.
FHA Loan Limits Are Higher for 2-4 Unit Properties
No matter how many units your property has, you’ll still be constrained by the FHA loan limits in your area. Fortunately, however, FHA loan limits are actually much higher for properties with between 2-4 units. For example, while the 1-unit property limit for low-cost areas in the contiguous U.S. is $424,100, the 4-unit property loan limit goes up to $815,650. And, while the FHA 1-unit loan limit for high-cost areas in Hawaii, the U.S. Virgin Islands, Alaska, and Guam is $954,225, the 4-unit property loan limit goes up to a staggering $1,835,200.