Buying a duplex, triplex, or fourplex with an FHA loan gives you something most mortgage programs don't: tenants who help cover your mortgage from day one. It's a real strategy — often called house hacking — and the FHA loan program makes it possible with as little as 3.5% down. But the rules are specific. A few of them will shape which properties you can even consider before you start searching. Knowing those rules upfront saves a lot of heartache later.

What Properties Qualify for an FHA Multi-Family Loan

FHA loans cover residential properties with one to four living units. So a duplex (2 units), triplex (3 units), or fourplex (4 units) all qualify. Per HUD's FHA Single Family Housing Policy Handbook (4000.1), FHA mortgage insurance applies only to properties with one to four living units intended for residential use — five or more units fall outside this program and require commercial financing instead.

Mixed-use properties can also qualify. However, at least 51% of the building's floor space must be residential. So a small apartment above a storefront could work, as long as the residential portion meets that threshold.

The property must also meet FHA condition standards. It can't have major safety or structural issues. We'll cover what appraisers check in a later section, but this is worth knowing early — especially if you're looking at distressed properties.

One thing we see buyers get wrong: they assume they can use an FHA loan for a 5-unit building because they plan to live in one unit. That's not how it works. Five or more units means commercial financing, full stop. If that's your goal, it's worth looking at commercial loan options instead.

The Owner-Occupancy Rule and What It Requires

FHA loans exist to help people buy homes — not investment properties. Because of that, you must live in one of the units as your primary home. According to HUD's FHA Single Family Housing Policy Handbook (4000.1), the borrower must establish occupancy within 60 days of closing and maintain the property as their principal residence for at least one year.

That one-year rule matters. After 12 months, you can move out and rent your unit if your situation changes. But you can't buy with FHA intent on renting all units from the start.

FHA also allows up to four co-borrowers on one loan. This opens the door for situations where a couple buys with family members, or where multiple qualifying borrowers pool their income. Each co-borrower's income and debt go into the file, so having a financially strong co-borrower can help your overall qualification.

How Rental Income Factors Into Your Qualification

This is one of the biggest advantages of buying a multi-family home with an FHA loan. You don't have to qualify on your personal income alone. Per HUD's FHA guidelines (4000.1), lenders may count up to 75% of the projected gross monthly rental income from non-owner-occupied units when calculating a borrower's qualifying income.

That 75% figure comes from the FHA appraisal — specifically a market rent analysis. The appraiser estimates what each unit would rent for on the open market. Lenders use that figure, not whatever the current tenants actually pay. So even if a property is vacant or underrented, the appraisal number is what counts.

Here's a simple example. Say you buy a triplex. The appraiser estimates each non-owner unit rents for $1,400 per month. That's $2,800 in gross market rent. FHA allows 75% of that — or $2,100 — to count as qualifying income. Combined with your regular income, that can make a meaningful difference in how much mortgage you qualify for.

The Self-Sufficiency Test — The Rule That Shapes Your Property Search

This is the rule most buyers hear about too late. For three- and four-unit properties, FHA requires what's called a self-sufficiency test. Per HUD Handbook 4000.1, 75% of the total gross market rents for all units — including the unit the borrower occupies — must equal or exceed the total monthly mortgage payment (PITIA: principal, interest, taxes, insurance, and association dues if any).

Notice the difference. For rental income qualification (covered above), only the non-owner units count. For the self-sufficiency test, all units count — including yours. And the test doesn't care about your income. The property itself must pencil out.

A real example of the self-sufficiency test

We worked with a buyer in Colorado who found a fourplex he loved. Each unit had an appraised market rent of $1,200 per month. Total market rent: $4,800. Seventy-five percent of that is $3,600. His PITIA came out to $3,900. The property failed the test by $300. He either needed a lower purchase price, a higher rent market, or a different property. He found a fourplex two miles away where the rents supported the payment, and that deal closed.

The self-sufficiency test only applies to three- and four-unit properties. Duplexes skip it entirely. So if you're on the edge of qualifying, a duplex may give you more flexibility — even if it means fewer rental units.

FHA Loan Limits and Down Payment Requirements

FHA loan limits for multi-family properties are higher than for single-family homes. According to HUD, the 2025 baseline FHA loan limits for multi-family properties range from $637,950 for a two-unit property to $958,350 for a four-unit property in standard-cost areas. [Note: 2026 limits should be confirmed at HUD's FHA program page before publishing.] High-cost areas like Denver or South Florida carry significantly higher limits.

For Colorado buyers and Florida buyers, many markets fall into high-cost zones. That means the FHA limit for a fourplex could be well above the baseline. Your lender can pull the exact limit for your county.

Down payment works the same as it does for single-family FHA loans. With a credit score of 580 or above, you put down 3.5%. Scores between 500 and 579 require 10% down. Below 500 is not eligible for FHA financing.

One thing buyers often miss: lenders may also require three months of PITIA in cash reserves after closing. That's separate from your down payment and closing costs. So your total cash need at closing is higher than the down payment alone.

What the FHA Appraisal Checks — and the 203(k) Option

FHA appraisals do two things at once. They determine market value, and they check the property's condition. FHA appraisers look for safety and habitability issues — things like exposed wiring, broken handrails, water damage, and roof condition. Attic inspections are standard. For multi-unit properties, each unit gets evaluated.

Per HUD Handbook 4000.1, FHA's Minimum Property Requirements apply to all 1–4 unit residential properties — meaning every living unit in a multi-family property must independently meet habitability standards, including a functioning kitchen with a sink and stove hookup, before FHA financing can be approved./p>

This matters because a distressed multi-family property — the kind often priced below market — may not pass the FHA appraisal as-is. That doesn't mean you're out of options. The FHA 203(k) rehabilitation loan program allows borrowers to finance both the purchase and renovation costs of a 1-4 unit property in a single loan, per HUD guidelines. So you can buy a property that needs work and roll the repair costs into your mortgage. It's a powerful option for buyers willing to take on a project — and it pairs especially well with multi-family properties where renovating a unit can also increase rental income.

One other note: FHA rates on multi-family loans tend to run lower than conventional rates on similar properties. In our experience working with buyers in Colorado and Florida, the rate advantage often lands around 0.5% to 1%, depending on credit profile and market conditions. That adds up over a 30-year loan, especially on larger loan amounts.

If you want to see how different loan types compare for your situation, it helps to look at other loan programs side by side. Conventional multi-family loans exist too, and for some buyers they're a better fit.

Frequently Asked Questions