Question about FHA Financing with Multifamily Houses

[Scott Haney]

Hey guys!  I'm a bit new to the game and I've been reading up on loads of articles on this website and a few others and believe I am starting to get a good base knowledge of real estate.  I'm a recent college graduate and saving up at my parents place before have enough money to move out (planning on sometime around May 2016).

My question about FHA financing is related to buying a multifamily house which is what I am considering doing when I move out to gain experience in the real estate world. Can anyone provide some good guidance or insight on experiences they have had with this? I am aware if you pursue FHA financing the owner must live in the unit.

Thanks!

[Logan Allec]

In my opinion, it's the best person for a young person to get started investing in real estate. One thing to keep in mind when looking for an FHA owner-occupied triplex or fourplex is that 85% of the market rents on all four units need to cover your monthly payment (principal, interest, taxes, insurance, and mortgage insurance). This is known as the self-sufficiency rule. It only applies to 3- and 4-unit properties (not SFRs or duplex) bought using FHA financing. I put together a spreadsheet here to help potential house hackers quickly analyze whether or not a property qualifies. There are other FHA requirements concerning which you should contact your local lender, but determining whether or not a triplex or fourplex meets the self-sufficiency rule is a good place to start as this rule will immediately eliminate many properties from your search, especially in expensive markets like mine.