September 11, 2023
What can you buy with an FHA mortgage? First-time home buyers and experienced home buyers who have never used an FHA mortgage sometimes wonder whether they can use an FHA loan to buy certain property types.
We examine some of these issues below. Remember that state law, local ordinances, and FHA loan rules may change over time, it’s best to reexamine the rules before you start your house-hunting phase of the journey.
Use An FHA Loan To Buy A Multi-Unit House
One permitted use of an FHA home loan program is buying a multi-unit property. You can use an FHA mortgage to buy a house with as many as four living units.
Use An FHA Loan To Buy A Multi-Unit Rental Property
This is allowed by FHA loan rules. The caveat? This is permitted ONLY if you agree to live in at least one of the living units. Occupancy is a requirement for FHA loan approval.
FHA Loans For Business Purposes?
FHA loans are not allowed strictly for business investing purposes. You can’t buy an investment property with an FHA mortgage, but you can use one for a mixed-use or mixed-zoning property.
FHA loan rules say this is true if the structure’s purpose is primarily residential.
If more than 25% of the total floor space of the property is used for non-residential purposes, you may risk being denied an FHA loan for that property but there are variables that may affect this decision.
Your experience may vary.
FHA Mortgage Loans: No Money Down?
The FHA and your lender require a minimum investment from the borrower. This investment is at least 3.5% of the price of the home, but you do NOT have to pay that amount yourself, depending on circumstances.
FHA loan rules permit using a down payment assistance program that meets FHA standards. You can also get help from friends and family.
Buying An Old House With An FHA Mortgage
FHA loans allow the purchase of older existing construction homes as long as they meet FHA minimum standards. FHA loans do include age restrictions on manufactured housing, but not for typical suburban houses.
For more information on these issues, talk to a participating FHA lender or contact the FHA directly. You can also learn more about FHA loan credit requirements.
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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