SFH To Duplex Zoning FHA Loan Requirements

[Johnny Mack]

Im looking to house hack a duplex in Philadelphia with an FHA loan, I put an offer in on a property and my realtor tells me that the seller warned us that the FHA may not approve the loan because the duplex is zoned as a SFH. I did some research to find that most multifamily homes in philly are illegally zoned, even fully remodeled ones. Is this zoning rule true? if so what are my options besides going conventional? Thanks for any help.

[Troy Sheets]

Originally posted by @Frank Hinck:

@Johnny Mack

Contact the city and apply for a Variance. If it’s an existing non-conforming they might let you keep it if you can show it’s in good shape and meets requirements (I relalize it’s not Section 8), but look up the Section 8 checklist for rentals and make sure all those items are checked off, no peeing paint, smoke/CO detectors, handrails, etc.

Our variance process is insane and takes many months (community meetings where they vote on it, which aren't happening anyway due to Covid) and is far from guaranteed. If the house already has a variance in place or active rental licenses because it's been used this way for years ("grandfathered in" for lack of a better term) he may be ok but the variance process here isn't friendly nor fast and it's unfortunately not a fit for this type of purchase. He can pull the U&O cert and see if it's allowed to be used as a duplex. I bought a 4-unit from a family that had always used the house that way since it was built in the 50's but it was "illegal" as far as the city was concerned since it wasn't zoned as MFH any longer due to the base zoning changing years ago and the owners never got rental licenses. I took the owner down to L&I, we showed them pictures of the separate gas and electric meters, utility bills, and leases from "family members" since you don't need licenses to rent to family and 2/4 were family, and they gave us a pass, but it doesn't happen often that way. 

The separate meters are a good sign but not a guarantee. Also, his agent should have in the contract something to the effect of "home must be a legal duplex" to keep him safe. Not an agent so don't know the exact wording to use but that's something my wife uses for her MFH house hack buyers to keep them safe contractually since MFH use and zoning in Philadelphia can be very tricky.