December 3, 2021

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How You Can Use An FHA Home Loan

FHA Mortgage Loan Issues: "Identity Of Interest"

Do you need to know what you are allowed (or NOT allowed) to do with an FHA mortgage? If you want to purchase a home with an FHA loan, you can buy a fixer-upper, a typical suburban home ready to move into, or even build your home from the ground up on your own lot using an FHA One-Time Close construction mortgage.

But there are some things you are not allowed to do with an FHA home loan. Let’s look at the “can” and “cannot” angles to see what’s possible with an FHA mortgage.

You CAN Purchase A Multi-Unit Property With An FHA Mortgage

FHA home loans are for properties with one to four units. FHA home loan limits are larger for homes bigger than a single unit. Some borrowers forget and look at the FHA loan limits for homes in their county but only look at the single unit column–don’t forget to check the FHA loan limits for 2-unit, 3-unit, and 4-unit properties, too!

You CAN Purchase And Rehab At The Same Time

FHA 203(k) Rehabilitation mortgages allow you to buy and renovate a property using the same mortgage.

You CAN Purchase A Condo, Mobile Home, or Manufactured Home

FHA loan rules permit owner-occupiers to buy “regular” suburban homes, but also mobile homes, modular housing, manufactured homes, etc. 

Each type of FHA loan has its own nuances but in general you should expect the same low down payment requirements (3.5% for those who qualify with FICO scores at or above 580 and who meet any additional credit score requirements issued by the lender).

You CANNOT Purchase Investment Property With An FHA Single-Family Mortgage

For the purposes of this discussion, “investment property” means any property the buyer does not plan to live in as the primary residence. 

Yes, we know that vacation homes and second homes are not technically investment properties. However, the same rules apply–if you don’t plan to use the house as your home address, you won’t be approved for an FHA purchase loan.

You CANNOT Use An FHA Loan To Purchase Property To Use As A Hotel Or Air-b-n-b

FHA single-family home loans, even those with four units, must be owner-occupied within 60 days of closing, and even if you do live on the property, you are not permitted to buy a home with FHA loan funds for the purpose of turning it into a bed and breakfast, Air b-n-b, condo-hotel, etc.

The FHA terms these as “transient occupancy” properties (meaning the renter stays less than 30 days) and you won’t be approved for an FHA single-family home loan for one.

You Can Purchase A Home Classified As Real Estate

Any property that cannot be taxed as real estate (no permanent foundation) that cannot be brought into compliance with FHA guidelines in ways acceptable to the lender and the FHA won’t be approved for a mortgage. That means that houseboats, RVs, or mobile homes not intended to be placed on a permanent foundation can qualify for an FHA mortgage.

Joe Wallace - Staff Writer

By Joe Wallace

October 27, 2021

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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