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House Hacking a multifamily with an FHA Loan

One of the top financing options for house hacking a multifamily property, other than a VA loan, is using an FHA loan.

For a duplex (2 units), the minimum down payment requirement is 3.5%.

For a triplex or fourplex (3-4 units), it gets a little more tricky. You must be able to prove that it passes the FHA self-sufficiency test. This means that 75% of gross rents must cover 100% of the mortgage (principal, interest, taxes, and insurance).

Here’s a simple example:

Mortgage = $4,000/month

Unit 1 = $1,000/month

Unit 2 = $1,000/month

Unit 3 = $1,000/month

Unit 4 = $1,000/month

Total Rents = $4,000/month

$4,000 x 75% = $3,000

This example fails the test by $1,000/month. To pass, you must put down a higher down payment amount until your monthly mortgage is less than $3,000/month.

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