illegal 3rd unit, FHA financing

[Rebecca Peters]

hi BP! I've been on the hunt for my first house hack purchase. Ive found a great 2 unit property that has 3rd unit that was built without registering it with the city, so technicallly illegal. I will be using FHA financing and my mortgage broker said that this illegal unit could cause issue during the appraisal and potentially not allow me to purchase the house with third unit.

Has anybody dealt with this situation? My mortgage broker said that the main problem is the kitchen and that if the power to the stove was cut off and literally plastered back into the wall it wouldn't be an issue. Would appreciate any other feedback from other peoples experience. Thank you!