Understanding FHA loans for multifamily properties

FHA loans for multifamily

Are you dreaming of becoming a homeowner and an investor at the same time? Buying a duplex, triplex, or fourplex with an FHA loan might just be the perfect opportunity for you. FHA loans offer aspiring homeowners a path to multifamily property ownership with low down payments and competitive interest rates. Here are some things you will want to know if you are considering an FHA loan for a multifamily property.

Overview of FHA loans

First things first, what is an FHA loan? The Federal Housing Administration (FHA) backs FHA loans, designed to assist individuals with moderate incomes or lower credit scores in achieving homeownership. These loans typically require a down payment as low as 3.5%, making them an attractive option for many first-time buyers.

The FHA multifamily advantage

Unlike traditional single-family FHA loans, multifamily FHA loans allow you to purchase properties with up to four units. This means you can live in one unit and rent out the others, potentially offsetting your mortgage payments and building wealth through equity and rental income.

FHA loan limits

FHA loan limits are set regionally, depending on property costs.

In New York City, for example, the maximum FHA loan amounts for multifamily properties can vary depending on the specific county and the number of units in the property.

As of 2024, the FHA loan limits for multifamily properties in New York City range from $1,472,250 for a two-unit property to $2,211,600 for a four-unit property in the five boroughs. These limits are subject to change annually and are based on factors such as median home prices in the area.

It’s essential to consult with a mortgage lender or FHA representative to determine the current loan limits for multifamily properties in your desired location within New York City. Understanding these limits can help you determine your purchasing power and plan your investment strategy accordingly.

Qualifying for an FHA Loan

To qualify for an FHA loan for a multifamily property, you must meet certain requirements:

Occupancy: You must intend to live in one of the units as your primary residence.

Credit Score: While FHA loans are known for being more lenient with credit scores, having a higher score can improve your chances of approval.

Debt-to-Income Ratio: Lenders will assess your ability to manage monthly payments based on your income compared to your debts. You can also use 75% of the expected rental income to qualify for an FHA multifamily loan.

Property Standards: The property must meet FHA guidelines for safety and habitability.

The benefits of multifamily ownership

Investing in a duplex, triplex, or fourplex offers several advantages:

Rental income: Tenants’ rent can help cover your mortgage, reducing your housing costs or providing additional income.

Property appreciation: Multifamily properties can appreciate in value over time, potentially increasing your equity.

Tax benefits: You may be eligible for tax deductions on mortgage interest, property taxes, and operating expenses.

Property control: As the landlord, you have control over property management and can make decisions to increase its value.

The buying process

Pre-approval: Get pre-approved for an FHA loan to determine your budget and strengthen your offer.

Find a property: Look for duplexes, triplexes, or fourplexes that meet your criteria and budget.

Make an offer: work with your real estate agent to make a competitive offer on a property.

Underwriting and approval: complete the loan application process, including property appraisal and inspection.

Closing: sign the necessary paperwork and officially become the owner of your multifamily property.

Tips for success

Research local regulations: understand landlord-tenant laws and zoning regulations in your area.

Budget for repairs: factor in maintenance costs when calculating your budget and rental income.

Screen tenants carefully: Select reliable tenants to minimize vacancies and ensure timely rent payments.

Build a network: establish relationships with contractors, property managers, and real estate professionals for support.


Buying a duplex, triplex, or fourplex with an FHA loan can be a rewarding way to achieve homeownership and start building wealth through real estate investment. With careful planning, research, and the right team of professionals, you can successfully navigate the process and enjoy the benefits of multifamily property ownership.