fha loan two family homes guide for buyers

How FHA financing works for duplexes

An FHA-insured mortgage can fund a two-unit property when you plan to occupy one unit as your primary residence. With a credit score of 580 or higher, the minimum down payment is 3.5%; lower scores may require 10% down. You will pay upfront and annual mortgage insurance, and lenders verify owner-occupancy. Underwriting often counts a portion of market rent from the second unit to support your debt-to-income ratio, subject to guidelines and appraisal rent estimates.

Benefits and trade-offs

This strategy, often called house hacking, can reduce your monthly cost while building equity. However, the home must meet FHA Minimum Property Standards, and appraisals can flag repairs that must be completed before closing.

• Live in one unit, rent the other to offset the payment.
• Potential to use anticipated rent for qualifying, with documentation.
• Loan limits vary by county and number of units.
• Property condition matters; health and safety issues must be fixed.
• Budget for vacancies, maintenance, and reserves.

Next steps: get preapproved, compare payments with and without rent, and consider an FHA 203(k) if renovations are needed. Sellers may contribute up to 6% toward closing costs, which can help keep cash-to-close manageable.