Dallas, TX · Member since 2017 · 30 posts · 8 votes
I'm trying to learn more about FHA loan. I want use an FHA loan to buy my first duplex investment property. Are there limitations on what you can buy with and FHA loan? Does the house need to have a certain amount of repairs?
The house technically needs to be owner occupied in order to qualify for a FHA loan. So unless you intended to live in the duplex for at least one year, it would not qualify for an FHA insured loan. If you did occupy one half of the property for the required year term, FHA would allow you to finance 96.5% of the appraised value, so it would be a minimal down payment. Are you looking to house hack?
Repairs come into play if your looking at a 203k loan, which you can streamline if the repairs are 30k or lower.
You can buy anything from 1-4 units using an FHA loan. There is a limit on purchase price; somewhere around $640,000 if you meet he income guidelines. If I were you and if you can afford it, Id maximize the ROI both financially and educationally by purchasing a fourplex rather than just a duplex. There is also more security in it as you have more tenants paying your mortgage.
The home needs to meet certain habitability points prior to closing like no lead paint, everything in good working order like smoke detectors. Common sense stuff
Ive used an FHA loan 2 times now and ill be looking for my third when the market settles down. You just need to be careful in this market because the payment can quickly add up as taxes, insurance and also PMI is included in your payment. So when the values drop out whether its like '08 or just a small amount, you still need to pay the mortgage. My advice, keep your exit plan of refinancing in mind before signing up for this.