FHA 203k on unattached multifamily property

[Anthony Lucent]

In the middle of my first multifamily purchase, we decided to go for the owner occupied 2-4 unit multifamily for all the common reasons Im sure you hear about all the time. I ended up finding a 3 unit property here in Manitou springs that needed a lot of TLC due to past abuse and differed maintenance. The property is zoned R5 with a main 3br house and in the back has 2 individual detached cottages, they are all the same address just "A, B, and C" units. The Manitou area is expensive for me but I was confident in my numbers so I thought no problem I will do the FHA 203k and fix it up because I know all I would have to put down would be 3.5% (I offered 5%) so I made an offer and got it under contract.

Now here we are in the home stretch to closing and the deal is about to fall apart, my mortgage agent just told me that no lender will do an FHA 203k mortgage on this property with less than 25% down because the units are not attached together.  I have been all over every scrap of info I can find on the internet about the 203k and I cant find this rule anywhere.

Has anyone ever heard of this 'rule' or done a deal on a property like this one?  It feels like theyre making this **** up.  Any help or advice anyone anywhere could give me would be beyond appreciated.