Buying a 3-4 Unit Property

by Keith Landis on May 1, 2011

Buying a 3-4 unit property in Pennsylvania is often a great investment.  The buyer obtains a primary residence and has extra units to rent out and collect extra income.  Often this extra rental income ends up covering the mortgage payment and expenses of the property.  This enables the owner to live in the property with their housing expenses covered by the rents received.

I am please to see that some of the rules for 3-4 unit properties have recently relaxed.  Below are some quick guidelines for purchasing a 3-4 unit property with a Government Mortgage either through the FHA or the VA.


  • The minimum credit score is 640
  • Loan To Value (LTV) 90% and higher – The borrower must continue to qualify with the full Principal Interest Taxes Insurance (PITI) for the subject property. Rental income from existing leases is not permitted for the non-owner occupied units.
  • Maximum LTV for FHA purchase – 96.5%.
  • Maximum LTV for VA purchase – 100%.
  • LTV < 90% – Existing lease agreements may be used to calculate rental income.  No evidence of the lease transfer from the seller to the borrower is required.
  • A 25% vacancy factor will be applied to the lesser of the monthly rent indicated on the lease agreement

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