There are many assumptions about home loans, especially in the realm of government home loans. One may typically assume that if the government is administering an individual a home loan that it is only allowable to pertain a modest, single-family property with these funds.
FHA home loans can be used to obtain a multi-unit property. These kinds of properties are desirable because you will not only be a home owner, but you will get to pay off your mortgage with drastically lower payments and build equity much faster.
What kind of multi-unit property can the FHA home loan be used on?
How this works is that the borrower of the FHA home loan will qualify for and be approved to purchase a multi-unit property. This will be either for two units (a duplex), three units (a triplex), or four units (a fourplex). The most units you may have is four, and the main stipulation is that you live in one of the units. Another requirement will be that if you are renting out the properties, the tenants will need to have been living there, or if they will be new tenants, you need a prepared lease agreement and their deposits from them ahead of time. You cannot normally count the rent payments as part of your current income.
What kind of perks can you look forward to in using the FHA home loan for multi-unit properties?
The benefit to doing this is you will rent out your other units to help you pay off your home loan. Though it would be enticing to charge a high amount of rent so that the entire mortgage payment per month is not out of the borrower’s pocket, this mortgage holder may want to service themselves by charging a reasonable amount of rent that is at the county median. This will attract more attention in filling up your units, as long as you are not taking a loss in renting out your property. You will pay the mortgage off quicker, you will pay no penalty fees with paying back the FHA home loan early, and the property can grow in value over time.
If you want more in-depth information on the FHA home loan, you may call our office at (877)432-LOAN (877-432-5626) or use our site’s chat feature to speak to a knowledgeable associate.
People with large families in their local area may find this to be an enticing concept. For example – you have a triplex with two empty units. Your uncle alongside his wife lost their apartment because it was being converted to a condo. Now, your brother and his wife are pregnant and need more space. You could rent out your other units to your family, since you know they are stably employed, and you will feel comforted knowing that you are related to and familiar with your tenants. As long as the family members have a prepared lease agreement and their deposits, you will be all set to truly keep it in the family.
How can you go above and beyond for your renters, while protecting your investment?
As a landlord, you will not only be bettering your situation, but you can also service your tenants by helping them build their credit score. If you take part in the RentTrack program, you allow tenants to pay rent online, which transfers to your account within one to three business days. Credit bureaus Experian and Transunion will build the tenant’s credit history, and RentTrack will also give you access to ScreeningOne. This will allow you to look at background information on potential or existing tenants. For more information on RentTrack, you may call our office at (877)432-LOAN (877-432-5626) or use our site’s chat feature.
Will your down payment be higher when buying a multi-unit property under the FHA home loan?
Since the loan will now be for a multi-unit property, another assumption would be that the down payment percentage with the FHA will be higher. Lucky for you – the 3.5 percent down payment average for the FHA home loan still stays.
Is there any way to get an FHA home loan for a property with more than four units?
The FHA, under Section 207/223(f), also can allow for borrowers to refinance or acquire a multifamily building with a minimum of 5 residential units. These properties that have been repaired or renovated more than 3 years prior to the date of mortgage consideration, or do not have complete bathrooms and kitchens, will not be approved. This is also not considered to be under the FHA home loan, but you may call us at (877)432-LOAN or use our site’s form to apply for an FHA loan.
To learn about USDA Home Loans, click here.