Yes, you can purchase a duplex with an FHA loan. An FHA loan is a mortgage insured by the Federal Housing Administration and is designed for lower-income borrowers who may have lower than average credit scores.
When you’re looking to buy a duplex with an FHA loan, there are a few things to keep in mind:
- Occupancy Requirements: One of the requirements for obtaining an FHA loan is that you must live in one of the units as your primary residence for at least one year. This is important because FHA loans are intended for owner-occupants, not investors.
- Loan Limits: FHA loans have limits on how much you can borrow, which vary depending on the area you’re buying in. Duplexes might be more expensive than single-family homes, so you’ll need to ensure that the price falls within the FHA loan limits for your area.
- Condition of the Property: The FHA has specific guidelines about the condition of the property you can purchase. The duplex will need to meet certain safety, security, and soundness standards. An FHA-approved appraiser must inspect the property to ensure it meets these standards.
- Down Payment: FHA loans typically require a smaller down payment than conventional loans. As of my last update, you might only need to put down as little as 3.5% of the purchase price.
- Mortgage Insurance: With an FHA loan, you’ll have to pay for mortgage insurance premiums. This includes an upfront premium at the time of purchase and an annual premium that’s split into 12 monthly payments.
- Financial Qualifications: You’ll need to meet certain financial criteria to qualify for an FHA loan. This includes having a steady employment history, a valid Social Security number, and lawful residency in the U.S. Your credit score, while generally more lenient than conventional loan requirements, still plays a significant role in the approval process.