Heber City, UT · Member since 2016 · 6 posts · 2 votes
I want to use an FHA loan in order to buy a triplex or fourplex. I know I'd have to live there until I refinance it, which I'm okay with. I could also get enough money for the down payment from some family. The main problem I have is that my income is so low. The income from renting out the other parts of the fourplex would more than pay for the mortgage each month, but I read that in order to qualify for the FHA loan, I can only have a debt to income ratio of 31% or less and with the mortgage and my current income it would be more like 150-200%, which obviously the banks won't like. What can I do in order to get the fourplex now, without having to quadruple my hours at work?
Investor · Lehi, UT · Member since 2015 · 435 posts · 300 votes
10y
So I just got a duplex and made several offers on 2-4 plexes.
For an FHA loan the house needs to first be in good repair and be up to certain FHA safety standards.
When I was going to my loan officer before making offers, I could count 75% of the other units rents that I would not be living in as my income. Thus allowing me to get a higher price range 2-4plex than lets say me buying a Single family residence.
-Also @Branton Stanley I dont know where you heard you have to refinance your FHA loan after you move out I never heard that at, all I heard is that you only have to live there for a year commitment and you do not need to refinance your FHA loan out after you move out you could just keep it in place.
Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
10y
The only way you could do that is try to purchase a property that already has tenants. Then they have to take part of that rental income as yours. If the property is vacant you can't do that.
Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
10y
Yes, they should count some of the income, I'm not sure exactly how much. It may also depend on other factors such as are they on a lease, or month to month tenants.
I want to use an FHA loan in order to buy a triplex or fourplex. [...] The main problem I have is that my income is so low. The income from renting out the other parts of the fourplex would more than pay for the mortgage each month, but I read that in order to qualify for the FHA loan, I can only have a debt to income ratio of 31% or less [...]
What crack head vegetable brained loan officer(s) have you been talking to?
I'm not licensed in your market, but you need to talk to some folks that are.
Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
10y
Often when you ask something a lender doesn't do, they make it sound like you "can't" do that, just because they "won't" do that, and they don't want to send you somewhere else.
Investor · Lehi, UT · Member since 2015 · 435 posts · 300 votes
10y
So I just got a duplex and made several offers on 2-4 plexes.
For an FHA loan the house needs to first be in good repair and be up to certain FHA safety standards.
When I was going to my loan officer before making offers, I could count 75% of the other units rents that I would not be living in as my income. Thus allowing me to get a higher price range 2-4plex than lets say me buying a Single family residence.
-Also @Branton Stanley I dont know where you heard you have to refinance your FHA loan after you move out I never heard that at, all I heard is that you only have to live there for a year commitment and you do not need to refinance your FHA loan out after you move out you could just keep it in place.
Salt Lake City, UT · Member since 2016 · 7 posts · 4 votes
10y
I was also looking at the potential of leveraging an FHA to get a quick first duplex. My understanding (although I'm totally new, could be wrong), is the same as Sean. I believe you just need to live in it for a year. I never saw anything about until you refinance.
Heber City, UT · Member since 2016 · 6 posts · 2 votes
10y
Yeah after reading more, it just says you have to live there a year. One thing I read said it was a good idea to refinance after a year, so you no longer have to pay the mip but that's it. I just misread it the first time
You can use 75% of the potential rental income of the other units. Yes, it is a good idea to refinance out of the FHA mortgage when you have at least 20% equity built up to avoid MIP.
Make sure to buy it right so that you can do some value add to the building within the first year. This should allow you to possibly re-finance sooner.