How Rental Income Can Help You Qualify
Projected rent from the units you will not occupy may be included in the lender’s income calculation.
The appraiser generally provides an estimate of fair market rent. The lender commonly applies a 25% vacancy and maintenance reduction, meaning it uses 75% of the eligible market rent rather than the full amount.
For example, assume the two rental units in a triplex each have an estimated market rent of $1,200 per month.
| Calculation |
Amount |
| Combined Estimated Rent |
$2,400 |
| 75% of Estimated Rent |
$1,800 |
In this simplified example, the lender could use $1,800 of projected monthly rental income, subject to the appraisal, FHA requirements and underwriting results.
The rent from the unit you will occupy generally is not included as qualifying rental income. It is included in the separate self-sufficiency calculation for a three- or four-unit property.
The FHA Self-Sufficiency Test for Three- and Four-Unit Properties
FHA requires a three- or four-unit property to pass a self-sufficiency test. The test does not apply to a duplex.
The lender starts with the appraiser’s estimated market rent for all units, including the unit you plan to occupy. It then applies the required vacancy and maintenance reduction to determine the property’s net self-sufficiency rental income.
That adjusted rental amount must be equal to or greater than the property’s total monthly mortgage payment.
The payment used in the test generally includes:
- Principal and interest
- Real estate taxes
- Hazard and flood insurance, when applicable
- FHA annual mortgage insurance
- Homeowners association dues or similar assessments
Self-Sufficiency Test Example
Assume an appraiser estimates the following market rents for a triplex:
| Unit |
Estimated Monthly Market Rent |
| Unit 1 |
$1,200 |
| Unit 2 |
$1,200 |
| Unit 3 |
$1,100 |
| Total Market Rent |
$3,500 |
| 75% Adjusted Rent |
$2,625 |
If the full monthly mortgage payment is $2,500, the property passes the simplified test because $2,625 is greater than $2,500.
If the payment is $2,750, the property does not pass because the adjusted rent is lower than the payment.
Your personal income cannot be used to cure a failed self-sufficiency test. Possible responses may include reducing the loan amount, changing the financing structure or selecting another property or loan program.
FHA Mortgage Insurance on a Multifamily Property
FHA multifamily purchases under the single-family program generally require an upfront mortgage insurance premium and an annual mortgage insurance premium.
The upfront premium is generally 1.75% of the base loan amount. It can usually be financed into the mortgage.
The annual premium is divided into monthly installments and included in the mortgage payment. Its rate and duration depend on the loan term, loan amount and original loan-to-value ratio.
A mortgage with the minimum 3.5% down payment generally carries annual FHA mortgage insurance for the loan term unless the mortgage is paid off or refinanced.
See mortgage insurance requirements by loan type for a comparison with conventional private mortgage insurance.
Benefits of Buying a Multifamily Home With FHA
Lower Down-Payment Option
A qualifying borrower may purchase an eligible two- to four-unit property with 3.5% down.
The minimum investment applies to the transaction’s required amount rather than only the portion of the home you plan to occupy.
Rental Income May Help With Qualification
Eligible projected rent from the other units may increase qualifying income and help offset the effect of the larger mortgage payment.
The lender uses an adjusted amount rather than the full advertised or expected rent.
Higher Loan Limits
FHA permits higher mortgage amounts for two-, three- and four-unit properties than for one-unit homes.
The higher limits recognize that multifamily properties generally cost more, but you still must qualify for the payment and meet the applicable loan-to-value requirements.
Potential to Offset Housing Costs
Rent collected from the other units may offset part of your mortgage payment and property expenses after closing.
Actual cash flow depends on rent collection, vacancies, repairs, utilities, property management and other operating costs.
Risks and Costs to Consider
Vacancies
A vacant unit does not produce rental income, but the mortgage and other property expenses continue.
Maintain enough savings to cover periods between tenants and unexpected interruptions in rent.
Repairs and Maintenance
A property with several units has more appliances, plumbing fixtures, heating systems and occupied spaces to maintain.
Review the age and condition of major systems before purchasing and budget for ongoing repairs.
Landlord Responsibilities
Owner occupancy means you may live close to your tenants while handling leases, rent collection, repairs, notices and local housing requirements.
Review applicable state and local landlord-tenant laws before renting any unit.
Utilities and Operating Expenses
Determine which utilities are separately metered and which costs will remain your responsibility.
Water, sewer, trash, common-area electricity, lawn care, snow removal and maintenance can reduce the amount of rent available to offset the mortgage.
Rental Income Can Change
The appraiser’s market-rent estimate is used for underwriting, but it does not guarantee that you will collect that amount.
Local demand, tenant turnover, property condition and rent restrictions can affect actual revenue.
Can You Use FHA for a Five-Unit Apartment Building?
The residential FHA mortgage described here is limited to eligible properties with one to four units.
A building with five or more units generally requires commercial financing or a separate HUD multifamily mortgage program. Those programs have different borrower, property, underwriting and occupancy requirements.
If you do not plan to occupy the property, compare conventional and investment-property loan options. That can include paths using your home equity, like using a cash-out refinance or a HELOC to purchase an investment property.
Can You Have More Than One FHA Loan?
FHA generally will not insure more than one primary-residence mortgage for the same borrower at the same time.
Limited exceptions may apply for circumstances such as:
- Relocation for employment or another qualifying reason
- An increase in family size when the current home no longer meets the household’s needs
- A borrower leaving a jointly owned primary residence
- A nonoccupying coborrower on another FHA-insured mortgage
Owning another property does not automatically prevent FHA eligibility, but the new FHA-financed home must meet the primary-residence and exception requirements.
How to Prepare for an FHA Multifamily Purchase
1. Confirm the Legal Unit Count
Verify that all units are legally recognized under local zoning, building and occupancy rules.
An advertised unit or converted space may not qualify as a legal housing unit for appraisal or underwriting purposes.
2. Use the Loan Limit Tool
Use the loan limit tool above to find the current FHA limit for the property’s county and legal unit count.
3. Estimate Rental Income Conservatively
Do not rely on the seller’s advertised rents alone. The lender uses appraisal-supported market rents and applies the required vacancy and maintenance adjustment.
4. Test Three- and Four-Unit Properties Early
Ask for an estimated self-sufficiency calculation before making an offer when enough property and rent information is available.
The final determination depends on the FHA appraisal and actual loan terms.
5. Review Cash Reserves
Prepare for the required cash to close and the post-closing reserves needed for vacancies, repairs and ordinary expenses.
6. Inspect Each Unit and Major System
Review the roof, foundation, electrical system, plumbing, heating and cooling, appliances and safety conditions throughout the property.
7. Review Existing Leases
Understand current rents, security deposits, lease expiration dates and tenant rights that may transfer with the property.
The Bottom Line
An FHA loan can finance an eligible duplex, triplex or fourplex with a down payment as low as 3.5% when you occupy one unit and meet the program and lender requirements.
Projected rent from the other units may help you qualify, but the lender generally uses only an adjusted portion of appraisal-supported rent.
Three- and four-unit properties must also pass the self-sufficiency test and generally require at least three months of mortgage-payment reserves after closing.
Before making an offer, confirm the legal unit count, use the loan limit tool above to verify the county limit, review projected market rents and calculate the property’s full payment and operating costs.
Frequently Asked Questions
Can You Buy a Duplex With an FHA Loan?
Yes. You can use an FHA loan to buy an eligible duplex when you occupy one unit as your primary residence and meet the borrower and property requirements.
Can You Buy a Triplex With an FHA Loan?
Yes. An eligible triplex can be financed with FHA when you occupy one unit. The property must also pass FHA’s three- to four-unit self-sufficiency test.
Can You Buy a Fourplex With an FHA Loan?
Yes. FHA single-family financing covers eligible properties with up to four units. You must occupy one unit, and the property must pass the self-sufficiency test.
How Much Down Payment Is Required for an FHA Multifamily Loan?
The down payment may be as low as 3.5% with a qualifying credit score of at least 580. Scores from 500 to 579 are generally limited to 90% loan-to-value, which usually requires 10% down. Lenders may set higher credit requirements.
Can Rental Income From the Other Units Help You Qualify?
Yes. Eligible projected rent from units you will not occupy may be included in qualifying income. The lender commonly uses 75% of the appraisal-supported market rent rather than the full amount.
What Is the FHA Self-Sufficiency Test?
For a three- or four-unit property, adjusted market rent from all units must be equal to or greater than the full monthly mortgage payment. The calculation includes the estimated rent for the unit you will occupy. Duplexes are not subject to this test.
How Much Are the 2026 FHA Loan Limits for Multifamily Homes?
In standard-cost areas, the 2026 limits are $693,050 for two units, $837,700 for three units and $1,041,125 for four units. Higher limits apply in designated high-cost areas. Use the loan limit tool above to find the exact limit for the property’s county.
Do You Need Reserves for an FHA Triplex or Fourplex?
Yes. Three- and four-unit purchases generally require verified reserves equal to at least three months of the total monthly mortgage payment after closing.
Can You Use FHA for a Five-Unit Property?
The residential FHA mortgage program is limited to properties with one to four units. A property with five or more units generally requires commercial financing or a separate HUD multifamily program.
How Long Must You Live in One Unit?
At least one borrower generally must occupy the property within 60 days of signing the mortgage documents and intend to continue using it as a primary residence for at least one year.
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