Reverse Mortgage And Rental Property
A HECM can go on a home with two to four units when you live in one of them as your principal residence. Here is how the units, the rent and any other rentals you own are treated.
How the units are treated
The home can have up to four units, but one of them has to be where you live.
- HUD limits a HECM to a one- to four-unit home where the borrower lives in one unit as their principal residence.
- Our reverse mortgage program accepts a single family home with 1 to 4 units, as long as it is owner occupied.
- A home with 2 to 4 units needs a completed Hotel and Transient Use of Property form, HUD-92561.
- A one-unit home with a single accessory dwelling unit, or ADU, still counts as a one-unit property.
- The home must meet FHA minimum property standards, and the HECM may be used to make required repairs if the cost is within the program limits.
- FHA will not insure a HECM on a boarding house, a hotel or motel, a vacation home or other transient housing.
Up to four units qualify
You live in one unit
An ADU stays one unit
Required repairs may be covered
Reported rental income can count
HECM for Purchase works too
How Rental Income Is Counted
Every HECM includes a financial assessment of your income, and our reverse mortgage program counts rent only in specific cases.
When our reverse mortgage program calculates your debt-to-income ratio, it will not count projected rental income from the home you are borrowing against if it is a 2-4 unit property, or from your current residence. It only accepts rental income on investment properties you already own and already report on your tax returns.
For those other rental properties, HUD calls for your last two years of tax returns with Schedule E. The net rental income is averaged from Schedule E, as long as you still own every property listed there. Some costs shown on Schedule E, such as depreciation, taxes, insurance and HOA dues, may be added back.
Positive net rental income is added to your income. Negative net rental income is counted as a debt. Income from commercial space cannot be included in rental income calculations.
Why choose Saxton for a reverse mortgage on a 2-4 unit home
This page is for borrowers who live in one unit of a 2-4 unit home or own other rentals, and for adult children helping a parent with either.
Every Property Is Reviewed
HUD calls for 24 months of property tax payment history on all real estate you own. HOA fee payment history is also verified for all owned real estate for the same 24 months.
Tax Returns Tell The Story
Our reverse mortgage program counts rent only on investment properties you already own and already report on your tax returns. HUD calls for the last two years of those returns with Schedule E.
Proof Of Where You Live
If you own more than one property, our reverse mortgage program may ask for proof that this home is where you live, such as IRS tax transcripts, your latest Social Security benefit statement or your most recent SSA-1099 showing this address. Sending these with the loan file helps avoid closing delays.
Your Unit Is Your Home
HUD defines a principal residence as the place where you keep your permanent home and typically spend the majority of the calendar year. The home must be the principal residence of each borrower, and a borrower can have only one at a time.
Buy A Multi-Unit Home
HECM for Purchase can buy an existing one- to four-unit home where you will live in one unit as your principal residence. Our reverse mortgage program requires you to move in within 60 days of closing.
Keep Your Old Home Rented
With HECM for Purchase, you can keep your current home as a rental if you have enough income to cover the new home’s taxes, insurance and maintenance, the required investment, and the existing mortgage, taxes and insurance. Our program sets that test at a debt-to-income ratio of no more than 50 percent.
Hear From Homeowners Like You
Frequently Asked Questions
Owners of multi-unit homes and other rentals ask these questions most often.
Not on a property you only rent out. Our reverse mortgage program requires an owner occupied primary residence, and HUD limits HECMs to one- to four-unit homes where you live in one unit as your principal residence. FHA will not insure a HECM on a vacation home.
Yes, if you live in one of the units as your principal residence. Our reverse mortgage program accepts single family homes with 1 to 4 units. A 2-4 unit home needs a completed Hotel and Transient Use of Property form, and the home must meet FHA minimum property standards.
Not projected rent. When our reverse mortgage program calculates your debt-to-income ratio, it will not count projected rental income from the home you are borrowing against if it is a 2-4 unit property. It only accepts rental income on investment properties you already own and already report on your tax returns.
It can. Our reverse mortgage program accepts rental income on investment properties you already own and already report on your tax returns. HUD calls for your last two years of tax returns with Schedule E, and a net loss on those properties is counted as a debt.
Yes. HUD calls for 24 months of property tax payment history on all real estate you own. HOA fee payment history is also verified for all owned real estate for the same 24 months.
Talk with us first. Our reverse mortgage program limits commercial space in the building, and income from commercial space cannot be counted as rental income.
No. HUD treats a one-unit home with a single ADU as a one-unit property. On a home that already has two or more units, an extra dwelling unit counts as another unit.
Saxton Mortgage does. Our reverse mortgage program accepts single family homes with 1 to 4 units when you live in one unit as your principal residence.
Find out what you qualify for
Tell us about your units, your other rentals and your tax returns, and we will check how it fits our program.
Get Pre-Qualified- U.S. Department of Housing and Urban Development, FHA and housing resources
- U.S. Department of Housing and Urban Development, FHA mortgage insurance premiums
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.