FHA Multi-Unit Property Wealth | GO Mortgage

If you’ve been looking for a way to buy a home and create long-term financial stability, an FHA multi-unit property loan might be the perfect solution. 

These government-backed loans are designed to help more people become homeowners, while also offering the chance to earn rental income from tenants living in the same building.

FHA loans allow you to purchase a property with up to four units, as long as you live in one of them as your primary residence. And if you’re purchasing a triplex or fourplex, there’s an additional hurdle you’ll need to pass first: the FHA Self-Sufficiency Test.

Here’s what that means—and how to position yourself for homebuying success.

What is the FHA Self-Sufficiency Test and why does it matter?

The FHA Self-Sufficiency Test is a tool used by lenders to evaluate whether a multi-unit property (with three or four units) can generate enough rental income to cover its monthly mortgage payment. This isn’t a measure of your income as a borrower—it’s a way for the Federal Housing Administration (FHA) to ensure the property can “pay for itself” based on projected rents.

Here’s how the test works:

1. A certified FHA appraiser estimates the market rental income for all units.
2. That total is reduced by a 25% vacancy factor (to account for potential downtime).
3. The resulting figure must be greater than your projected mortgage payment (PITI: principal, interest, taxes, and insurance).

For example, if the total projected rent is $6,000 per month, only $4,500 of that can be used for the Self-Sufficiency Test. 

Your full mortgage payment must be equal to or less than that $4,500 figure to qualify.

You’ll also need to show that you have at least three months’ worth of mortgage payments in reserves after closing. 

These rules help reduce risk for the lender and increase the chances you’ll be able to maintain the property without falling behind on payments.

How does the FHA determine rental income for your property?

Rental income projections are based on more than just a guess. Once you find a property, an FHA-approved appraiser will perform a market rent analysis. This includes:

• Reviewing rental comps from nearby properties with similar features
• Factoring in amenities like private parking, laundry, outdoor space, and more
• Adjusting for location—proximity to transit, schools, shopping, or entertainment can boost potential rent

The goal is to ensure that projected income reflects real-world conditions. This helps you understand whether the investment is viable and gives your lender confidence in the property’s long-term performance.

To improve your chances of passing the Self-Sufficiency Test, consider:

• Looking for units that are recently renovated or upgraded
• Targeting locations with high rental demand
• Choosing properties that offer added value (e.g., extra storage, energy-efficient appliances)

What types of properties qualify for FHA multi-unit financing?

FHA financing can be used to purchase homes containing between one and four residential units. But there are some key rules to understand:

• You must live in one of the units as your primary residence for at least one year.
• The Self-Sufficiency Test only applies to properties with three or four units, not duplexes.
• Buildings with five or more residential units are considered commercial properties and do not qualify for FHA-backed loans.

If you’re eyeing a duplex, you’ll still benefit from potential rental income, but you won’t be subject to the same income qualification standards. 

For triplexes and fourplexes, however, the Self-Sufficiency Test is non-negotiable.

What inspection and zoning requirements should you know?

Before your FHA loan can be approved, the property must meet specific zoning and inspection standards.

Zoning

Make sure the home is legally classified as a multi-unit property. That means:

• Each unit must have its own entrance
• Each unit must include a kitchen and bathroom
• Utility meters may need to be separate depending on local codes

If the property was converted from a single-family home into multiple units, verify that the zoning change was approved by your city or county. An improperly zoned property can derail your loan approval.

Inspection

Because you’ll be living in the home and renting out the other units, the entire property must be safe and up to code. An FHA inspection will check for:

• Functional HVAC, plumbing, and electrical systems
• Working appliances in each unit
• Structural soundness
• Proper egress (windows and doors for fire safety)

Keep in mind that inspections for multi-unit properties may cost more than single-family homes, since more components need to be evaluated.

Why consider a multi-unit home as your next investment?

Living in one unit while renting out the others offers a path to faster equity growth and financial flexibility. Here’s why:

• Offset your mortgage: Rental income can cover some or all of your monthly payment.
• Build equity faster: As property values rise, you’ll benefit from appreciation on the entire building, not just your unit.
• Start small as a landlord: FHA multi-unit properties are a great entry point for first-time real estate investors.
• Tax advantages: You may be eligible to deduct expenses related to managing the rental units (check with a tax advisor).

When structured right, an FHA multi-unit loan can turn your home into a wealth-building asset.

Common challenges and how to prepare

While the benefits are substantial, there are a few hurdles to be aware of—and smart ways to overcome them.

Challenge 1: Failing the Self-Sufficiency Test

Solution: Work with a Mortgage Advisor early in the process to run projections. Consider asking for a pre-appraisal before submitting an offer.

Challenge 2: Zoning issues

Solution: Always check zoning with the local municipality before proceeding. Don’t rely solely on seller disclosures.

Challenge 3: High inspection costs or failed inspections

Solution: Budget for a thorough inspection and request necessary repairs from the seller during negotiation.

FHA Multi-Unit Property Loans: Final thoughts

Being proactive helps keep your deal on track and positions you as a confident buyer in a competitive market.

Interested in turning your home into a long-term investment? Our Mortgage Advisors are here to help you understand your loan options, run the numbers, and get pre-approved for the right multi-unit loan.

Start your application today and take your first step toward building wealth through real estate.