March 3, 2022
What is possible with an FHA home loan? If you don’t know all your options, you might be surprised to learn you can use an FHA mortgage to buy a house with as many as four living units, manufactured home or modular home, and even a condominium unit. There are some things you cannot use an FHA mortgage to buy, we’ll examine some housing types below:
Suburban Houses, Duplexes, And Townhomes
FHA loans can be used to buy a one-to-four unit property in a typical neighborhood that is primarily residential and a house where you plan to live as your home address. A duplex or townhome is eligible for an FHA mortgage if the property meets minimum standards, the same as a single-bedroom home or a condo.
Repo Homes And Foreclosures
You may be permitted to purchase a foreclosed home using an FHA 203(k) Rehabilitation loan to bring the property up to minimum requirements. That may be a condition of loan approval–be sure to ask the lender what is needed to be approved for the loan including any required compliance inspections, etc.
Multi-Unit Properties
You can use an FHA mortgage to buy a home with as many as four living units. You are also free to rent out the unused units you don’t occupy. The property must be primarily residential and any non-residential use of the home must be “subordinate” to the use of the building as a home.
Mixed-Zoning and Mixed-Use Properties
Some of the same rules for multi-unit properties translate for mixed-use and mixed-zoning options. The property must be primarily residential and the non-residential use of the home cannot exceed the residential use of the home.
Manufactured Homes and Modular Housing
Manufactured home loans through the FHA require the home to be placed on an approved permanent foundation as a condition of loan approval, but these loans ARE available from participating lenders who choose to offer them. Keep in mind that FHA loans for manufactured housing can include money to purchase the land the home may be placed upon.
Tiny Homes And Barndominiums
Some types of housing aren’t suitable for FHA loans. A tiny home is one of these since it is difficult to locate “comparables” for the purpose of appraisals and valuation. And for manufactured homes, there is a specific square footage requirement (no smaller than 400 square feet) that may preclude the purchase of a tiny home with an FHA mortgage regardless.
Farm Residences
It may be possible to buy a farm residence with an FHA mortgage but the loan is ONLY for the house and not for associated “excess land”, a farm business, etc.
Houseboats
A houseboat cannot be fixed to a permanent foundation, therefore it does not qualify for an FHA mortgage of any kind.
Recreational Vehicles/RVs/Trailers
These vehicles cannot be fixed to a permanent foundation or be taxed as real estate and therefore do not qualify for an FHA mortgage.
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 www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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