How To Use An FHA Loan For Investment Properties
While it’s not usually permissible to treat a residence purchased with an FHA loan as an investment property, or to get FHA loan approval for an investment property, a few notable exceptions are worth considering. Let’s learn about three of them below.
Rent Out Your Primary Residence
If you get relocated for your job and need a second home, you’re may potentially be allowed to rent out your first home that you purchased with an FHA loan, but you do still have to stay there for at least 1 year prior. After that, having tenants to make your mortgage payments may be your best bet, if you are permitted to do so.
Purchase A Multifamily Unit
Borrowers are allowed to purchase what could be considered a “multifamily” property of up to four units with an FHA loan. All the units can be occupied by tenants except one, which you must live in to meet your FHA requirements. Technically, a home with up to 4 units is a single-family residence – so as long as your homes is under that requirement and you inhabit 1 unit, you should be fine.
Depending on how much you charge your tenants, you may be able to stay at your property at essentially no monthly cost – and even have additional income from your renters.
Purchase A Fixer-Upper With An FHA 203(k) Loan
As mentioned earlier, FHA loans come with minimum property requirements, but FHA 203(k) loans allow FHA home buyers to buy homes that have failed to meet these requirements. With an FHA 203(k) loan, you can bundle the costs of repairing the home into the mortgage. Again, you’ll have to live in at least one unit of the home, but FHA 203(k) loans work for properties of up to four units, just like regular FHA loans.