Mulit unit with fha not an option

[Brendan O.]

Dear BP,

I have just been informed by a loan officer in San Franciso that buildings here will never qualify for fha loans. My idea to buy four units and live in one is out the window. What route should i go now?

Brendan

[J. Martin]

@Jenna Stonecipher and @Aaron Junck , you are right for conventional financing. But unless something has changed in the last year, FHA underwriters use 75% of the actual rents on the non-owner-occupied units to qualify for DTI ratios (and in fact used 75% of market rents from the appraisal on my COMPLETELY VACANT REO 4plex I purchased last year.) So this amount, combined with your gross w2 income would need to clear the DTI ratios..

If you make less than $100K/yr, it will probably be difficult to do in SF right now(maybe in the Sunset or Bayview?) Or you can go to nice areas of Oakland, and may be able to qualify out there.. But to be honest, FHA loans are not the most competitive in this market.. Given the low rents, you might be able to find a duplex in SF if you have a decent salary.. Part of the reason I went to the East Bay.. I like your enthusiasm for going big though! I would have borrowed $1MM no problem if I could have found something I could get approved on.. and cover close enough..