Start here
FHA loans for 5 or more units: the commercial HUD programs, not owner-occupied FHA
An owner-occupied FHA mortgage, the 3.5%-down loan most people mean by an FHA loan, covers properties of 1 to 4 units only. A building with 5 or more units is financed through HUD's commercial multifamily programs instead, such as 223(f) to buy or refinance and 221(d)(4) to build. Those loans go to a single-purpose company, not a person, and come from HUD-approved MAP lenders.
The short version
The phrase “FHA multifamily loan” means two different things.
| Owner-occupied FHA (single-family) | HUD/FHA multifamily | |
|---|---|---|
| Units | 1 to 4 | 5 or more on one site |
| Who borrows | You, as an individual | A single-asset company you control |
| Live there? | Required (principal residence) | Not required |
| Underwritten on | Your income and credit | The building’s net operating income |
| Down payment / leverage | At least 3.5% cash investment, by statute | Up to 87% of value (90% affordable), and limited by 1.15x coverage |
| Recourse | Personal | Non-recourse, with bad-acts carve-outs |
| Term | Set by the single-family program | Up to 35 years (existing) or construction plus 40 (new) |
| Who lends | FHA-approved single-family lenders | HUD-approved MAP lenders |
| Mortgage insurance | Single-family premium schedule | 0.25% upfront and 0.25% a year |
If your building has 5 or more units, everything you read about FHA single-family loans (credit score minimums, 3.5% down, county loan limits, owner-occupancy) does not apply. The rest of this site covers the commercial side.
Which HUD program fits what you are doing
| Program | Use it to |
|---|---|
| 223(f) | buy or refinance an existing apartment building |
| 221(d)(4) | build new apartments, or gut-rehab a building |
| 223(a)(7) | lower the rate or premium on a loan that is already FHA-insured |
| 241(a) | add units or fund a big renovation without replacing a low-rate FHA loan |
| Section 220 | build mixed use with a large commercial component in a revitalization area |
| Section 231 or 221(d)(4) | build senior apartments (62+) |
| Section 213 and co-op refinancing | finance a housing cooperative |
| Risk sharing, 542(c) | finance an affordable deal through a state housing finance agency |
| 207 and the MHC program | buy a manufactured home community as a nonprofit, co-op or public entity |
| 221(d)(4) or 223(f), under the 2026 build-to-rent rules | build or buy a community of rental houses, duplexes or triplexes |
Nursing homes, assisted living and other care facilities use HUD’s separate Section 232 program, which this site does not cover.
Five things consumer pages get wrong about 5+ units
- “You can use an owner-occupied FHA loan on a 5+ unit building if you live in one unit.” The owner-occupied program stops at 4 units. Section 203 of the National Housing Act limits single-family insurance on 1-4 unit homes to buyers who will live there; there is no owner-occupied path for 5 or more.
- “You can put 3.5% down on an apartment building.” Multifamily leverage tops out at 87% for market-rate property and 90% for affordable property, and the 1.15x debt service test often sets a lower loan.
- “You apply as an individual.” HUD requires a single-asset borrowing entity. Individuals, tenancies in common and DSTs can own interests above it but cannot be the borrower.
- “Any FHA lender can do it.” Only lenders approved for HUD’s Multifamily Accelerated Processing handle these loans. HUD publishes the list; see our lenders page.
- “It is fast, like a home loan.” A HUD multifamily loan runs through third-party reports, a HUD underwriter and a firm commitment. HUD does not publish an official processing time, but it is measured in months. The timeline guide explains where the time goes.
What it takes to qualify
- The property: 5 or more units on one site (8 for Section 231), full kitchens and baths, leases of 30 days or more, no hotel services. Existing properties for 223(f) generally need a certificate of occupancy at least three years old and about 85% occupancy.
- The numbers: the loan is the lowest of the loan-to-value test, the 1.15x coverage test (1.11x affordable), the statutory per-unit limits and the cost of the deal. Run them in the 223(f) sizer.
- The people: principals with multifamily experience, adequate net worth and liquidity, clean credit and a previous participation certification on Form HUD-2530.
Want to compare the HUD route with Fannie Mae, Freddie Mac or a bank? See HUD vs Fannie and Freddie, and the rates page for what recent HUD loans actually closed at.
Sources
- 12 U.S.C. 1709, Section 203 of the National Housing Act (1-4 family insurance and owner-occupancy rule)
- 24 CFR 200.73, property development requirements (five-unit minimum)
- HUD MAP Guide, Handbook 4430.G, 2020 edition, chapter 3 (programs and borrower rules)
- HUD Mortgagee Letter 2025-03, Multifamily changes in DSCR and LTV/LTC (Jan. 8, 2025)
- 90 FR 45789, Changes in Mortgage Insurance Premiums for FHA multifamily programs (Sept. 23, 2025)
- HUD Mortgagee Letter 2026-12, build-to-rent underwriting eligibility
- HUD, MAP-approved lender list
Checked against these sources on October 30, 2026. HUD changes program rules by Mortgagee Letter and Federal Register notice; the lender's commitment governs any loan.
Short answers
Can I get an FHA loan for a 5-unit building and live in one unit?
Not an owner-occupied FHA loan. That program insures 1 to 4 unit homes. A 5-unit building can use HUD's multifamily programs, but the borrower is a single-purpose company and the loan is underwritten on the building's income, so living there neither helps nor is required.
Is there a 3.5% down payment FHA loan for apartment buildings?
No. The 3.5% minimum belongs to the single-family program. HUD multifamily loans are capped at 87% of value for market-rate property and 90% for affordable property under Mortgagee Letter 2025-03, and they are also limited by debt service coverage, so a market-rate purchase needs equity of at least 13% of value.
Who makes FHA loans on apartment complexes?
HUD-approved Multifamily Accelerated Processing (MAP) lenders, about 65 firms on HUD's September 2026 list. They are commercial mortgage lenders approved for HUD's multifamily programs, a separate approval from single-family FHA lending. HUD insures the loan; it does not lend.
What credit score do I need for a HUD apartment loan?
The MAP Guide does not set a minimum credit score for the borrower's principals. The lender reviews the principals' credit, financial statements, net worth, liquidity and multifamily experience, and every principal files a previous participation certification (form HUD-2530).
Does a 5+ unit FHA loan have to be in a big city or a large property?
No. The rules require 5 or more units on one site and work the same for a 5-unit building as a 500-unit one. In practice the fixed costs (third-party reports, legal, HUD review time) weigh more heavily on a small loan, so compare them against bank or agency financing.