Can I buy a home with an FHA loan and live in ADU?

[Charles Plimpton]

Hello all,

I'm interested in buying a property with an FHA loan and still being able to earn income to partially cover the mortgage. I'm in Orange County, CA and my understanding is that it's very difficult to qualify for 3-4 unit properties with an FHA loan given prices in the area.

The way I see it, the best way to achieve the result I'm looking for is to buy a 2-3 br home + ADU, or to buy a duplex with a 2-3 br unit + studio unit. Obviously, I would live in the smaller unit and collect rent on the 2-3 br unit.

How does the FHA look at this in practice? Does living in the ADU as my primary residence satisfy FHA loan requirements and make this possible? Would it be easier to get approved with a duplex (2-3 br + studio) over the ADU scenario?

What if the ADU/studio unit is unpermitted? How does that affect things?

Any other pitfalls (appraisals, etc) I should be aware of?

Thanks in advance for everyone's help.

[Blake Aaron]

Hi Charles,

I'm a Realtor in Orange County, and I encourage you to contact a lender I work with often who brokers FHA loans, and she's based in Aliso Viejo. She can help answer those great questions! Marcia Patterson NMLS: 463367. PM me for contact info, as I can't post it here.