What FHA Rules Surprise Home Buyers the Most?
By Derek Tsakiris | NMLS #1007898 | Licensed in NH, VT & ME
The short answer: Three FHA rules surprise buyers the most.
FHA is not only for first-time homebuyers.
A seller can put up to 6 percent of the contract sale price toward your points, prepaids, and closing costs.
You can buy a home with up to four units when you live in one of them.
I've been a loan officer for nearly 15 years.
These same three rules surprise buyers here in the Upper Valley and NH's Lakes Region again and again.
Is an FHA loan only for first-time buyers?
No.
You can have owned a home before.
The rule is that you have to live in the home you're buying.
So if this is the second or third home you've bought, it's no problem to use an FHA loan for a home you're going to live in.
One note for buyers around Lake Winnipesaukee and Lake Sunapee, where a lot of people are shopping for a getaway. FHA doesn't cover a vacation home.
Can the seller help with my closing costs on an FHA loan?
Yes.
FHA lets a seller put up to 6 percent of the contract sale price toward your points, prepaids, and closing costs.
What this means is that you use less of your own money at the closing table.
It's negotiated in your offer, so it's a conversation for you, me, and your agent.
This is where teamwork matters. A knowledgeable mortgage professional and a knowledgeable Realtor, working together, can structure the deal properly from the start.
Can I buy a multi-family home with an FHA loan?
Yes. Up to four units.
Live in one and rent the others.
FHA's minimum down payment is the same 3.5% it is for a single-family home, with a credit score of 580 or higher.
The loan limits are higher too. In most of our counties, including Belknap County in the Lakes Region, the 2026 limit on a two-unit home is $693,050.
So a duplex in Lebanon, Claremont, or Laconia is on the table.
Your first home can come with a tenant.
For the rest of the FHA rules, including the 2026 loan limits for your county, read the free FHA Loan Guide for NH, VT, and ME. The FHA purchase loan page covers the program itself.
More in this FHA series
Frequently Asked Questions
Can the seller's help go toward my FHA down payment?
No. It can go toward your closing costs, prepaid items, and points. It also can't be more than your actual costs.
Do three-unit and four-unit homes have extra FHA requirements?
Yes. The rents have to be able to cover the payment on paper, and FHA wants to see three months of payments in reserve after closing.
Can I get an FHA loan with a credit score below 580?
Yes. FHA loans are available down to a credit score of 500 with a higher down payment. The program's rule is 10% down with a score from 500 to 579.
The Bottom Line
FHA financing is more flexible than most people think.
You don't have to be a first-time buyer. The seller can help with your costs. And your first home can come with a tenant.
Not every file fits every rule. Let's see what's possible for yours.
Source: HUD Handbook 4000.1.
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Derek Tsakiris | NMLS #1007898 | NEXA Mortgage, LLC NMLS #1660690 | Licensed in NH, VT & ME | Equal Housing
