MultiFamily Purchase under FHA in Los Angeles

[Bryson Scott]

Hi all!

I am currently looking for financing under fha for my second multi family property.

I’ve spoken to a direct lender and a broker who gave me the following responses:

The direct lender said: I need to find a property that I will occupy and the remaining units’ rent must cover 75% of the mortgage.

The broker said: because I purchased a property under fha in 2017 (which now is under a conventional loan) I can not use fha for another property.

Did the whole industry change last night? Or am I missing something?

Any advise is greatly appreciated.

[Jonathan Taylor]

@Bryson Scott I can see your confusion as its very frustrating getting different answers. Under FHA (3.5% down), you can purchase a duplex without subjecting the the self sufficiency test. But a 3-4 unit must adhere to this test meaning that 75% of existing rents MUST cover the NEW PITIA. Which in this market is closer to impossible. If you go conventional (5% down) you do not have as many conditions and will allow you to close while having another conventional loan. Your DTI is considered in all your scenarios and since I do not know your financial situation its unwise to give advice on this. But your front end/back end ratios need to be 36/43 all in.

Dm me for more specifics but I am in your same situation. Purchased a four unit with an FHA sponsored program and now after living there for two years Im moving onto my next purchase with 5% down but looking for duplexes to avoid the self sufficiency test.