FHA Loan for a duplex

[Austin Woyshnar]

Hey everyone,

Does anyone have experience using an FHA loan on a duplex? I am in the process of obtaining my first house and I ran into a problem. The house is in pretty good condition and I think I would be approved for the FHA after I added a couple of railings and fixed a window. However the roof on the detached garage in the back was recommended to be replaced during the inspection.

I know the process for the FHA loan is a pain, but right now it's the only option because the down payment jumps up to 15% for a duplex on a conventional. The house is a homerun based on the numbers so I am trying to make it work.

Does anyone have any information on using an FHA loan for a duplex? I thought I heard once that as long as one side of the house is in livable condition I would be ok, but I am not sure if the garage would be included in this. Any information helps!

[Austin Styer]

Hey Austin, 

This may not help for what you are asking for, but just wanted to add in my 2 cents here. Back in 2014 I purchased my first duplex using an FHA loan. Looking back, I did pretty good, I lived for free for 4 years and the appreciation, rent savings, and increased income set me up to purchase 2 additional properties. I would recommend if you can to try to get a conventional loan as rates are at all time lows and you would only need a 5% DP rather than 3.5%. The only way to get the PMI off with an FHA loan is to refinance into a conventional once you reach 20% equity. That'll cost you money out of pocket or equity to refinance and who knows what the interest rates will be in 5 years or so. As always, if you can't do conventional, then do FHA for sure. Back then I didn't have the money or knowledge to get a conventional I just did what my lender said I could and it worked out, but doing FHA has costed me a lot of money to get the PMI off. I still won bigly on that first deal, and I would have refinanced again anyways with the way interest rates are now compared to 2014, but that may not be the case in 5 years or so. Just something to think about!