December 30, 2016
FHA mortgages for single family residences include a wide variety of eligible property types. You can purchase a typical suburban home with an FHA loan, a condo unit, manufactured home, modular home, or other approved structure meant to house a family that qualified under FHA loan rules. These properties can be single-unit homes or have up to four living units.
While it’s true that not all lenders approve loans for all the possible types of housing available under the FHA program (some lenders choose not to loan money for mobile homes or new construction homes, for example) there are some general guidelines about the types of property you can purchase from a participating lender.
FHA mortgages are approved for those who intend to be owner-occupiers. FHA mortgages are not available for investment property or for situations where the buyer will not be occupying the home as her or his principal residence.
All FHA properties must be on or affixed to a permanent foundation. This means the houseboats, recreational vehicles, or any other type of property not classifiable as “real property” due to it not being affixed to an approved permanent foundation would not qualify for an FHA mortgage.
Furthermore, HUD 4000.1, the FHA loan rulebook, has a list of property types that are not eligible for single-family FHA mortgages:
-commercial enterprises
-boarding houses
-hotels, motels and condotels
-tourist houses
-private clubs
-bed and breakfast establishments
-other transient housing
-Vacation Homes
-fraternity and sorority houses
Potential FHA borrowers may be permitted to purchase a multi-unit property, occupy one of the units, and rent out the remaining unused spaces. The income from such rentals may or may not be included in the borrower’s debt-to-income ratio calculations. Much depends on the individual circumstances and whether the borrower has any previous experience as a landlord. Lender standards may also apply.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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