FHA lending with an ADU that is NOT permitted

[Brian Caudill]

Hey everyone, thanks in advance for any advice or feedback you send our way! We are looking to purchase a 5 unit that is zoned for 3 dwellings but also has 2 unpermitted studios in the rear. We currently have an FHA loan on our primary home but are looking into using the "increase in family size" exception to get approved for a second FHA loan. Would the 2 studios in the back of the lot keep us from being able to qualify for an FHA? All units are occupied so dressing them up as storage units seems to be off the table. The only reason we are considering this deal is we would be paying pretty much the value of the main house in the front of the lot. Seems like the additional red tape might be worth it, but what are your thoughts?