Yes, it is possible to use an FHA loan to fund the purchase of a multifamily home.
An FHA 203(b) loan, the formal name for a standard FHA loan, can be used to fund the purchase of a one to four-unit property as long as you, as the owner, live in one of the units. FHA definitions still consider properties with four units or less single-family homes. That means any multifamily property with four units or less can qualify for this type of loan.
Common acceptable examples available for FHA loan financing are duplexes, triplexes, and quadplexes.
What if the home has more than four units?
The FHA offers different financing options for multifamily properties with five units or more. Borrowers hoping to purchase a property with five or more units may apply for an FHA multifamily acquisition loan or an FHA multifamily construction loan. These financing options don’t require you to live in the unit, but they come with their own set of rules.
Paddio does not currently offer FHA financing for homes above four units.
FHA Multifamily Loan Limits in 2025
If you want to use an FHA loan to purchase a multifamily property with four units or less, there are limits to how much you can borrow. These limits are in place to make sure that FHA loans remain accessible to lower-income individuals or families. FHA loan limits are assessed each year and often go up to match increasing home values.
Limits vary by region and property size. Generally, areas with more expensive properties have higher FHA loan limits. Some areas are categorized as low-cost and some as high-cost. Special exception areas, like Alaska, Hawaii, Guam, and the Virgin Islands, have even higher loan limits.
Here are the 2025 FHA loan limits for multifamily properties:
| Low-cost areas | High-cost areas | Special exception areas | |
|---|---|---|---|
| Single unit property | $524,225 | $1,209,750 | $1,814,625 |
| 2-unit property | $671,200 | $1,548,975 | $2,323,450 |
| 3-unit property | $811,275 | $1,872,225 | $2,808,325 |
| 4-unit property | $1,008,300 | $2,326,875 | $3,490,300 |
FHA Multifamily Loan Pros & Cons
Before you decide to use an FHA loan to purchase a multifamily property, consider all the factors. Using a 203(b) loan for this type of purchase won’t work for everyone.
This loan type has both advantages and disadvantages. Consider, for example, you will need to take on the role of landlord while also living on the property. Here are the other pros and cons of an FHA multifamily loan:
Pros & Cons of Multifamily FHA Loans
| Pros | Cons |
|---|---|
| Only requires a 3.5% down payment | Requirement to live in one of the units |
| More affordable interest rates than conventional mortgage loans | FHA loans require paying a mortgage insurance premium (MIP) for at least part of the loan term |
| Borrower requirements aren’t as strict as conventional loans | As a landlord, you must always be on call to address tenant problems (or you must pay a property manager to be on call) |
| Rental income from extra units can cover some or all of your mortgage payment | You will need to make the full mortgage payments even during times when units aren’t filled |
FHA Multifamily Loan Requirements
One of the biggest benefits of using an FHA loan to buy a multifamily property is that there’s no separate loan type for two- to four-unit homes. The standard FHA 203(b) loan — the same one for single-family homes — can finance duplexes, triplexes, and fourplexes. As long as you meet the eligibility requirements and plan to live in one of the units as your primary residence, you can take advantage of FHA financing to start building wealth through rental income.
Here are the FHA multifamily loan requirements:
1. Minimum Down Payment
FHA loans require a down payment of at least 3.5% of the purchase price, but you must have a credit score of 580 or higher to qualify for this lower amount. If your credit score falls between 500 and 579, you’ll need to put down at least 10%.
Keep in mind that most private lenders have their own credit score requirements, which take precedence over the minimums set by the FHA. Most lenders require a credit score of at least 620.
Paddio requires a minimum 620 credit score, but we may approve lower scores if you have strong compensating factors. Get started to check your eligibility!
2. Owner-Occupancy Requirement
To use an FHA loan for a multifamily property, you must live in one of the units as your primary residence for at least one year. You can rent out the remaining units to tenants, but you can’t use an FHA loan to buy a multifamily property strictly as an investment home.
3. Loan Limits
FHA loan limits change each year and vary by location. The limits are also higher for multifamily properties than single-family homes. Always check the latest FHA loan limits for your area.
4. Debt-to-Income Ratio (DTI)
Lenders look at your debt-to-income ratio (DTI) to determine if you can afford the loan. Your DTI is the percentage of your monthly income that goes toward debt payments. FHA guidelines generally require a DTI of 43% or lower, though some lenders may approve higher ratios with compensating factors, like strong credit or cash reserves.
5. Mortgage Insurance
FHA loans require mortgage insurance premiums (MIP) to protect the lender in case of default.
This includes:
Upfront MIP: 1.75% of the loan amount, which you can roll into your mortgage
Annual MIP: Anywhere from 0.15% to 0.75% of the loan balance, paid as part of your monthly mortgage payment
6. Property Standards
The home must meet FHA minimum property standards, ensuring it’s safe, structurally sound, and free from major hazards. An FHA appraisal is required to confirm the property is in livable condition. Major issues like peeling lead-based paint, faulty wiring, or a damaged roof may need to be repaired before closing.
7. Rental Income Consideration
If you're buying a three- or four-unit property, lenders may allow you to use projected rental income from the other units to help qualify for the loan. This can make it easier to meet income requirements. The rental income must be verified through an appraiser’s market analysis or existing leases.
How to Get an FHA Multifamily Loan
Buying a two- to four-unit property with an FHA loan is a great way to get started in real estate while benefiting from a low down payment and flexible qualification standards. By living in one unit and renting out the others, you can offset your mortgage costs and build long-term wealth, all while meeting FHA’s standard loan requirements.
To get started, talk to several lenders who offer FHA loans. Compare each one’s interest rates and costs before deciding on a lender for your FHA multifamily loan.
Also, look for a real estate agent who knows the ins and outs of multifamily properties. They can help you look for the type of property you want. They can also point you to nearby areas that may have more multifamily properties.
Once you have a lender and a real estate agent, you can start the preapproval process. Your lender will review your financial details, like your credit score, income, and debt-to-income ratio, to determine how much you can borrow. Getting preapproved gives you a clear budget and makes you a more competitive buyer once you’re ready to make an offer.
When you find the right property and your offer is accepted, your lender will order an FHA appraisal to ensure the home meets minimum standards and is worth the purchase price. From there, you’ll finalize your loan approval, sign the paperwork, and get the keys to your new multifamily home.
