Real estate is one of the most popular investments one can make in life, as well as the easiest. Whether it be a commercial building, strip mall, or hi rise building, many of the wealthiest people own these. What if you can’t afford that right away? The best and first move one can make is to purchase a 3-4 unit family dwelling as their first home as an owner occupant. In most places nationwide, a potential homebuyer can use a FHA insured loan to buy a 3-4unit (anything after 5 units is considered a commercial purchase), as their first home. This allows you to possibly live rent and mortgage free, all while collecting and building assets in your financial future. So what and how do you go about buying a 3-4 family unit as your first home? Here is what you need to do so.

Credit and Credentials 

The credit score required to get pre approved and start shopping for the property will likely need to be above a 640-650. You can’t have any active collections at all, so those would need to be settled before starting the process. Your DTI (Debt to Income) plays a part into how much you will get approved for, but with buying an owner occupied investment property a lender can approve you with using 70% of the projected collected income from a building as income you’ll receive. The goal here is to have 2 of the units in a 3 family, or 3 of the units in a 4 family to pay the mortgage and you live in a unit rent and mortgage free.

Employment and Documentation

To get approved, one will need close to or more than 2 years of employment in the same job or field. So If you’re working at your current job for say under a year, but your previous position was the same and held for more than 2 years, you’ll be fine. If you’re a business owner or self employed, you’ll need to have been up and running for 3 years or more.

The following documentation will be needed:

2 Years tax returns and W2s for an employee/3 years 1099s and returns for self employed (also may need Profit and Loss statements)

Last 60 days paystubs and bank statements

401k Statements and child support agreements if these funds will be used.


Purchasing a property with FHA financing, requires a 3.5% down payment ($3,500 for every $100,000). Being a FHA buyer, closing costs can be requested from seller to be included in the price.  After you find a home in which you’d like to move forward on and qualify for you’ll also need the following.

Inspection cost: $700-800

Appraisal Cost:$725

Reserves: Estimate 6 months of the mortgage payment liquid or accessible.

Just a rough example but its good to have between $12,000-$15,000 saved up to purchase a 3 family home.

*Buying a three family there is another caveat thats needed many don’t know about. This is called “reserves”. This is 3 months of the mortgage payment (currently has been changed to 6 months during covid pandemic) in your bank account or readily available (401k, or retirement accounts can be accepted if accessible). This money doesnt get touched at all by the bank, they just want the security to know that you have funds to pay the mortgage in the event you have a vacancy or multiple once closed. After you close, the funds aren’t effected.


Buying a property with FHA, you’re allowed to receive gift funds from a family member or significant other. What that means is a relative can gift your downpayment to you in order for you to purchase. You’ll be requires to show evidence of the transfer (check issued, bank statements or both showing money leaving and arriving).


I hope the this helps you and gets you started in the process of buying your first 3-4 family home. As always, my team and I are here and ready to help you make the goal happen and get you into your home,






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