FHA Loans and illegal apt? 1st time home buyer

[Danica Estrada]

We are looking to buy a 2 family home in Westchester, NY. City records state it’s a code 220

(2family) but in reality there is a 1st, 2nd and 3rd floor apt. All 3 floors have different entrances and they all have their own kitchen with gas stove.

In addition to the 3rd apt it has a 2 floor detached garage. The 2 floor garage was constructed with the house in the 1900s. But the current owner built an apt for himself on the second floor of that detached garage. The kitchen in the garage is also gas powered.

Now I'm looking into getting g an FHA loan.... I want to have an idea what kind of hurdles we'll have to face in our near future when an fha appraiser comes to check out the home.

This is our first time home purchase and I dunno what the process will be like.

Thank you in advance for all your advice.

[Alex Horelick]

Hi @Danica Estrada,

There are a couple tricks that can be used to get this through an appraisal but it's pretty much all going to come down to the personality of the appraiser that comes out! Some of these deals will go through with removing kitchen appliances like the range/stove to make it not a "kitchen". The above garage space can be a recreational room, etc. I've had this situation a couple of times and some appraisers will look the other way while others will not. FHA inspections include additional safety items such as peeling paint and stairway handrails, etc. I would recommend any contract you agree to include protections in case the property does not appraise - at which point you can get your deposit back or renegotiate. Feel free to reach out if you have any other questions and good luck!