September 1, 2017
What kind of home can I buy with an FHA loan? That is an important question-not everyone is looking for a typical suburban home. Some people are interested in farm homes, condos, town homes or duplexes, or manufactured housing. What does the FHA loan handbook, HUD 4000.1, have to say about what can be purchased with an FHA mortgage?
FHA Single Family Loans For Owner/Occupiers
FHA single-family loans are intended for owner-occupiers who intend to use the home as their primary residence. There are some exceptions to this (we will cover those in another blog post), but for most transactions, borrowers must own/occupy the home as their main address.
FHA Single Family Loans For Multi-Unit Properties
Buyers can purchase homes they intend to occupy even if those homes have more than one living unit. You can purchase homes with as many as four living units and rent out the unused units as long as you occupy at least one unit yourself.
FHA Single Family Loans For A Variety Of Home Types
HUD 4000.1 says the following property types may be eligible for an FHA mortgage:
-detached or semi-detached dwellings
-manufactured Housing
-townhouses or row houses
-individual units within FHA-approved Condominium Projects
All homes to be purchased with FHA mortgages must be affixed to a permanent foundation. That means mobile, modular, and manufactured homes will have to be placed on a permanent foundation as a condition of loan approval.
FHA Loans Are For “Real Property”
Borrowers cannot purchase homes using an FHA loan if that home cannot be taxed or classified as real estate. That is why recreational vehicles and houseboats can’t be included in the FHA “approved” list.
FHA Loans Can Be Used For New Construction
You don’t have to be an existing property with an FHA loan. Many participating lenders offer FHA loans for new construction. These loans can be quite different than other version of the FHA mortgage we’ve already discussed, but for those who want a home built to suit, this is an excellent option.
Not all participating lenders offer all FHA loan options. It’s best to shop around for a lender to make sure you can get what you need from the transaction.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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