FHA Multi-Unit Conversion

[Evan Manship]

This question is probably suited for lenders/HUD consultants but anyone with experience please weigh in.

I am looking into a 203k loan for a multi-family property. There is a 8-unit building that is currently for sale in my desired neighborhood. Each unit is 500 sqft. I am curious to see if anyone knows the FHA regulations behind taking an 8-unit building at 500 sqft and converting it into a 4-unit building with 1000 sqft.

Technically I would still abiding by FHA's guidelines of a 1-4 unit property so long that the HUD consultant made the conversion to 4 units a requirement for the loan product.

Is this at all possible? If nothing else, it makes for an interesting discussion.