FHA Loan Basics for Multifamily Properties
FHA loans are government-backed mortgages designed for owner-occupants. They’re one of the few programs that allow purchase of 2–4 unit properties with owner-occupant terms and low down payments. Key requirements: live in one unit as primary residence, 580+ credit score for 3.5% down, stable employment history, and debt-to-income ratio under 50%.
FHA loan features for multifamily house hacking
| FHA Loan Feature | Details |
|---|---|
| Minimum down payment | 3.5% (580+ credit score) |
| Property types eligible | 1–4 unit properties (you must occupy one) |
| Upfront MIP | 1.75% of base loan amount |
| Annual MIP | 0.55–0.85% depending on LTV and loan term |
| MIP removal | Refinance once equity reaches 20%+; not automatic |
| FHA loan limits (2025) | Vary by county; up to $1,209,750 in high-cost areas |
| Rent counting for qualification | 75% of appraised fair market rent from non-owner units |
The Fourplex House Hack: Full Numbers
Example: $450,000 fourplex, 4 × 2BR units, each renting at $1,200/month in a Midwest market. Three units rented, one occupied by owner.
Fourplex house hack monthly cash flow analysis
| Financial Item | Monthly Amount |
|---|---|
| Gross rental income (3 units × $1,200) | $3,600 |
| Vacancy allowance (8%) | −$288 |
| Effective gross income | $3,312 |
| Mortgage P+I (3.5% down, 7%, 30yr) | $2,891 |
| FHA MIP (0.55%/yr) | $201 |
| Property taxes ($5,400/yr) | $450 |
| Insurance ($3,600/yr) | $300 |
| Maintenance reserve (1% of $450K) | $375 |
| Total monthly costs | $4,217 |
| Your effective housing cost | $905/month ($4,217 − $3,312) |
Living in a 2BR/1BA apartment for $905/month — while building equity and having three tenants help pay your mortgage — in a market where comparable 2BR rentals cost $1,200+. That’s $295/month in savings, $36,000 in equity + appreciation over 5 years, and a real estate education at the cost of living rent-level housing.
When Can the Fourplex Pay You to Live There?
In higher-rent markets or with higher down payments (20%+), fourplexes can generate positive cash flow — meaning the three rental units not only pay all your costs but also generate surplus income. With 20% down on the same $450,000 property: monthly cost drops to $3,607. With $3,312 in effective rental income, deficit is only $295 — and higher rents or a smaller loan push to breakeven quickly.
Model a Fourplex House Hack in Your Market
Enter purchase price, local rents, and down payment to see your cash flow and effective housing cost.