04/07/2026
Not many people know this, but you can use an FHA mortgage to purchase a 2 to 4 family property with a minimum down payment requirement of 3 1/2% as long as you live in one of the units as your primary residence. Then you can rent out the other units and collect rental income. A couple of extra requirements get added on if you are looking to buy a 3 to 4 family that don’t apply to a two family. These are: # 1) the “self-sufficiency test” ** this means the total of all the rental income of that property needs to be more than the mortgage payment. The rental income you use in the calculation is going to be either the lower of the fair market rent or the current rent being paid by an existing tenant that will continue to live there after you purchase the property. #2) you will need to prove you have three months of reserves left in your bank account. ** one month of reserves equals one mortgage payment on the proposed mortgage. So if your proposed mortgage payment is going to be $4000 a month you will need to show that you have at least $12,000 left over in your bank account after closing. This can be in your checking, savings, investments, 401(k), IRA, etc.. These extra requirements do not apply to a two family, which is why sometimes it’s easier just to purchase the two family as your first investment. Please reach out if you have any questions!
