Failing FHA self sufficiency test options

[Daniel Coleman]

Hello All,

I am actually helping a friend who is trying to purchase a quadplex, but a very unique quad plex.  THis partular quad is a single parcel, but actually is as follows:

2bd 1 bath 1100sq ft SFH

2bd 1 bath 900sq ft SFH

1bd 1 bath 660sq ft duplex

Studio 450sq ft duplex

This is the issue. The FHA appraiser appraised the value fine, but when he appraised the rents he is WAY off. Not to mention first off the rents that have been collected are as follows:

1050- 2bd 1100sq ft 

1000- 2bd 900sq ft

920- 1bd

800 -studio

FHA Market rents based on appraisal:

1120-2bd 1100sq ft

770-2b 900sq ft

575-1bd

400-studio

The PITI is around 2460 while this only hits 2148 after the 25% vacancy rule for FHA. I have provided comps closer (3.8 miles away) compared to the comps that the appraiser used (10 miles away) and he says he wants something closer. Also the appraiser used actual 4plex apartment buildings as his comps where this is nothing like that. My question is what options do we have to convince the appraiser, does anyone know of a conventional mortgage for a owner occupied 4plex that is less than 25%?

thanks in advance