Two $499,000 fourplexes: one passes FHA’s rent test, one misses by $255

FHA insures loans on buildings with up to four units, as long as the building is your principal residence, and the down payment can be as low as 3.5%. HUD’s glossary defines a principal residence as the home you live in for most of the year.

A triplex or fourplex also has to pass a test that a house or a duplex doesn’t: its rents have to be able to carry the mortgage payment. HUD calls it self-sufficiency.

What is FHA’s self-sufficiency test?

The self-sufficiency test compares a building’s rent with its mortgage payment. HUD’s Handbook 4000.1, the rulebook FHA lenders follow, sets it out for three- and four-unit properties. As of its August 12, 2026 update, it works like this:

1. Start with the appraiser’s estimate of fair market rent for every unit. That’s what the appraiser thinks each unit would rent for.
2. Take off the larger of two amounts: the appraiser’s estimate for vacancies and maintenance, or 25% of that rent. At least a quarter always comes off, and what’s left is what HUD calls net self-sufficiency rental income.
3. Compare it with the monthly payment. The payment divided by that income may not exceed 100%. Put simply, the rent HUD counts must cover the whole payment.

The handbook calls the payment PITI, for principal, interest, taxes and insurance. Its list of what makes up a borrower’s total mortgage payment also includes FHA’s monthly mortgage insurance premium and any association dues, so the example below counts the premium too.

A duplex doesn’t take this test, since the handbook applies it to three- and four-unit properties. Passing it doesn’t replace the usual check of your own income and debts.

Does the unit you live in count?

Yes, your own unit counts. The handbook’s calculation uses the rent “from all units, including the unit the Borrower chooses for occupancy.” The appraiser estimates what your unit would rent for, and that figure goes into the test even though nobody will pay it while you live there.

So the test sees four rents while your bank account sees three. The last section shows what that gap costs you.

How do two fourplexes do on the test?

Take two fourplexes priced at $499,000 each, with $6,400 a year in property taxes and $3,600 for insurance. The appraiser puts market rent at $1,575 a unit for Fourplex A and $1,300 for Fourplex B, and estimates vacancies and maintenance below 25%, so the 25% applies.

Both are bought with FHA’s minimum 3.5% down, $17,465, at an assumed 6.5% on a 30-year loan. FHA’s upfront premium is 1.75% of the loan (Mortgagee Letter 2023-05), and HUD lets you add it to the balance, which brings the loan to $489,961. With less than 5% down on a loan this size, the yearly premium is 0.55% as of September 2026, about $225 a month at the start.

These are example figures, not a quote.

Fourplex A passes: its $4,155 payment is 87.9% of the $4,725 of rent HUD counts. Fourplex B fails, because the same payment is 106.5% of its $3,900. On buildings like these, the line falls at about $1,385 a unit.

What can you do if a building fails?

The test weighs two numbers, so a building that fails needs a smaller payment or more rent that HUD will count.

• Put more down. Fourplex B passes with about $51,650 down, 10.4% of the price, which is about $34,200 more than the minimum. At that size the loan is under 90% of the price, so under the same HUD chart the yearly premium drops to 0.50% and ends after 11 years.
• Pay less for the building. A lower price shrinks the loan and the payment with it.
• Check the rents before you offer. The test runs on the appraiser’s estimate, so the rents that matter are the ones similar units nearby actually lease for. This duplex analysis shows how far a seller’s rent roll can sit from today’s rents.

How much cash does an FHA fourplex take?

The cash to buy Fourplex A goes well past the down payment.

• Down payment: $17,465. HUD’s glossary sets the minimum at 3.5% of the adjusted value, the lower of the price and the appraised value.
• Closing costs: $14,970, at this example’s 3%. The upfront premium isn’t part of it here, because it was added to the loan.
• Reserves: $12,464. For a three- or four-unit property, HUD requires three months of the payment left in your accounts after closing, and borrowed money doesn’t count (Mortgagee Letter 2023-17).

That comes to $44,899 before any work the building needs. How much money you need to buy a rental goes through each of these piles on a single-family house.

What does it cost to live in one of the units?

The test counts your unit’s rent, but you won’t collect it. To see what the building costs you while you live there, run it in the multifamily calculator with your own unit’s rent at $0. The calculator has no mortgage insurance line, so the $225 premium goes in the HOA field. To get the same loan, enter 1.81% down: the $17,465 you pay, less the $8,427 premium added to the loan. Everything else follows the calculator’s example: 6% of rent for empty months, $450 a month of utilities the owner pays, 10% for repairs and big repairs, and 8% for management.

Living in Fourplex A costs about $1,014 a month, against the $1,575 the appraiser says your unit would rent for. With all four units rented, the same loan would leave $183 a month. The test and your budget point the same way: on these terms, Fourplex B would cost $1,641 a month to live in.

Before you offer on a triplex or fourplex, run the test yourself. Take 75% of what similar units nearby lease for, your unit included, since that’s the most HUD will count, and set it against a lender’s estimate of the full payment. If the building only passes at the seller’s rents, that’s the number to check first.