Rentana Knowledge Base

Can you buy a multifamily home with an FHA Loan?

Well, picture this. A young couple is tired of renting and dreaming of buying their first home. They find a small fourplex in a growing neighborhood and realize something surprising: by living in one unit and renting out the others, they could cover most of their mortgage. The only problem is coming up with a big down payment.

That’s where an FHA loan comes in. Backed by the Federal Housing Administration, this loan program was designed to make homeownership easier for people with limited savings or lower credit scores.

What many first-time buyers don’t know is that FHA loans can also be used to purchase multifamily homes, as long as the property has four units or fewer and the buyer plans to live in one of them.

This setup to buy a multifamily home with an FHA Loan is one of the simplest ways to start investing in real estate. It allows you to become both a homeowner and a landlord with one purchase. You get to live in your property, build equity, and earn rental income from the other units, all while benefiting from FHA’s low down payment and flexible credit requirements.

For many new investors, this is how their real estate journey begins. It’s a smart way to learn property management, build financial stability, and grow wealth over time, all starting with a single FHA-backed multifamily home.

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Related: What is the 1 Percent Rule in Real Estate?

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What is an FHA Loan and How Does It Work for Multifamily Properties?

An FHA loan is a type of mortgage insured by the Federal Housing Administration. It was created to help more people become homeowners, especially those who might not qualify for a conventional loan because of limited savings or less-than-perfect credit.

FHA loans are offered by approved lenders but backed by the government, which makes them less risky for banks. This allows borrowers to qualify with smaller down payments and more flexible requirements.

Here’s the part that surprises many first-time buyers: you can use an FHA loan to buy a multifamily property, as long as it has up to four units and you live in one of them as your primary residence. That means you could buy a duplex, triplex, or fourplex, live in one unit, and rent out the rest to help pay your mortgage.

For example, if you purchase a triplex and rent out two of the units, the rental income from those units can often be counted toward your loan qualification. Lenders use that projected income to show that you can afford a higher loan amount, which opens the door to buying a larger or better-located property.

FHA loans also come with long-term fixed interest rates, which helps keep payments predictable. The standard term is 30 years, giving owners plenty of time to build equity while benefiting from rental income.

In short, an FHA loan can turn a small multifamily property into both a home and an investment. It’s a way to start generating income, build wealth, and gain hands-on experience as a property owner without needing a large amount of upfront capital.

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Related: What is the 2 Percent Rule in Real Estate Investing? 

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Requirements to Buy a Multifamily Home with an FHA Loan

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Buying a multifamily property with an FHA loan is one of the most accessible ways to start investing in real estate, but there are some specific rules you’ll need to follow. These requirements help ensure that buyers are financially ready and that the property itself meets FHA standards.

Here’s what you need to know before you buy a multifamily home with an FHA Loan.

1. Property Size Limit: Up to Four Units Only

FHA loans can only be used for properties with one to four residential units. Anything larger, such as a five-unit apartment building, is considered commercial real estate and does not qualify.

This means duplexes, triplexes, and fourplexes are all eligible, perfect for buyers who want to live in one unit and rent out the rest.

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2. Owner-Occupancy Requirement

To qualify for an FHA multifamily loan, you must plan to live in one of the units as your primary residence for at least one year. The remaining units can be rented out to generate income, but you cannot use this loan purely for an investment property where you don’t live on-site.

This rule helps make FHA loans a great fit for house hacking, where buyers live in one unit while using rental income from the others to cover expenses.

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3. Minimum Down Payment

One of the biggest advantages of an FHA loan is the low down payment. You can qualify with as little as 3.5% down if your credit score is 580 or higher.

For example, if you buy a fourplex for $600,000, your minimum down payment could be just $21,000, far less than the 20% most conventional loans require.

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4. Credit Score and Debt-to-Income Ratio

FHA loans are known for their flexibility, but lenders still look for borrowers who can handle the payments responsibly.

• A credit score of 580 or higher qualifies for the 3.5% down payment.
  
  
• Scores between 500 and 579 may still qualify, but you’ll need at least 10% down.
  
  
• Most lenders prefer a debt-to-income (DTI) ratio below 43%, though exceptions can be made for strong applicants.
  
  

Your rental income from the additional units can also help lower your effective DTI, making it easier to qualify.

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5. Property Appraisal and FHA Inspection

FHA-approved properties must meet safety and livability standards. During the application process, a certified appraiser will inspect the property to make sure it’s in good condition and free from major issues such as roof damage, electrical hazards, or structural problems.

If repairs are needed, the seller may need to fix them before the loan can close. This helps protect both you and the lender from buying a property with costly hidden issues.

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6. Loan Limits

The FHA sets annual loan limits based on local housing prices. These limits vary by county, so a fourplex in Los Angeles will have a much higher maximum loan amount than one in Kansas City.

As of 2025, the FHA loan limit for a four-unit property in most areas is around $1.4 million, though this can be higher in expensive markets. You can check the latest limits on the HUD website before you start shopping.

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Understanding these requirements will help you plan ahead and make your FHA multifamily purchase smoother. Once you meet the qualifications, you can take advantage of one of the most powerful tools available for first-time investors, using your home to build long-term wealth.

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Recommended: 9 Best AI Tools for Commercial Real Estate

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Pros of Buying a Multifamily Home with an FHA Loan

1. Low Down Payment
The biggest benefit is affordability. You can buy a duplex, triplex, or fourplex with as little as 3.5% down, which makes it much easier for new investors to enter the market. This lower upfront cost lets you keep more cash on hand for renovations or emergency savings.

2. Easier Qualification
FHA loans are designed to help first-time buyers, so the credit and income requirements are more flexible than conventional loans. Even if your credit score isn’t perfect, you can still qualify and start investing in real estate sooner.

3. Rental Income Helps You Qualify
One of the most useful features of FHA multifamily loans is that expected rental income from the other units can be used to help you qualify for a larger loan. That means your tenants help pay your mortgage from day one.

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Cons of Buying a Multifamily Home with an FHA Loan

1. You Must Live in the Property
FHA loans are only for owner-occupied homes, which means you have to live in one of the units for at least one year. If you’re planning to buy a property purely for investment, this type of loan won’t work for you.

2. Mortgage Insurance Premium (MIP)
All FHA loans come with a mortgage insurance premium, which protects the lender if you default. This adds to your monthly payment and can slightly reduce your overall cashflow.

3. Property Condition Rules
FHA appraisals are stricter than most conventional ones. The property must meet the FHA’s minimum standards for safety and livability. If the building needs significant repairs, you might need to fix them before closing, which can delay the process.

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So, Can You Buy a Multifamily Home with an FHA Loan?

Yes, you absolutely can. FHA loans make it possible for first-time buyers and new investors to purchase up to a four-unit property with a small down payment and flexible qualification requirements. By living in one unit and renting out the others, you can cover much of your mortgage and start building long-term wealth through real estate.

It’s one of the most accessible ways to become both a homeowner and an investor at the same time. With the right property, smart planning, and reliable tools to track your income and expenses, your first multifamily home can become the foundation of your financial freedom.

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How Rentana Helps New Multifamily Owners

Once you’ve purchased your multifamily property, the real work begins, managing income, tracking performance, and planning for growth. That’s where Rentana comes in.

Rentana is an AI-powered analytics platform built specifically for real estate owners and investors. It brings all your property data together in one place so you can see how your investment is performing in real time.

Here’s how it helps:

• Track Rent Trends: Stay updated on local rent performance and see how your property compares to similar buildings in the market.
  
  
• Forecast Future Performance: Get data-backed predictions on occupancy, rent growth, and market changes to help you make smarter decisions.
  
  
• Understand Portfolio Health: Monitor income, expenses, and returns across your properties with simple, visual reports.
  
  

For new multifamily owners, Rentana turns complex market data into clear insights, helping you manage your property with confidence and plan for long-term success.

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