Loan guidelines change, and lenders add their own requirements on top of the agency rules. Use this page to know what to ask, then confirm everything with a licensed loan officer before you make decisions.
FHA: 3.5% down on 1–4 units
FHA-insured loans allow a 3.5% minimum down payment with a credit score of 580 or higher, on properties with one to four units, as long as you live in one of them.
Source: HUD Single Family Housing Policy Handbook 4000.1- You must move in within 60 days and live there as your primary residence for at least a year.
- FHA loans carry mortgage insurance, both upfront and monthly. Ask for both numbers in writing.
- On 3–4 unit properties, the expected net rent has to cover the full mortgage payment (the self-sufficiency test).
- The property has to meet FHA's minimum property standards, which can be a hurdle on rough older buildings.
Conventional: 5% down on 2–4 units
Since November 2023, Fannie Mae has allowed as little as 5% down on 2–4 unit homes you live in, down from 15% (two units) and 25% (three to four units). It applies to standard purchases, HomeReady, and HomeStyle Renovation loans.
Source: Fannie Mae 5% down on 2–4 unit principal residences, effective Nov. 2023 (summary: The Mortgage Reports)- There's no FHA-style self-sufficiency test on 3–4 units.
- Conventional mortgage insurance can be removed later as you build equity. FHA's often can't be. Ask how that works on your specific loan.
- Credit and reserve requirements are usually stricter than FHA.
2026 FHA loan limits: Sacramento region
The limits are the same in Sacramento, Placer, and El Dorado counties.
| Units | 2026 FHA limit |
|---|---|
| 1 unit | $764,750 |
| 2 units | $979,000 |
| 3 units | $1,183,400 |
| 4 units | $1,470,700 |
The limit caps the loan amount, not the price. You can buy above it with a larger down payment.
How rent from the other units counts
This is the part most renters don't expect. When you buy a 2–4 unit property to live in, lenders can count part of the expected rent from the other units as income when you qualify. Typically they count a percentage of the lease amount or the appraiser's rent estimate, not all of it. The exact method differs between FHA and conventional loans and depends on your experience as a landlord.
Sources: HUD Handbook 4000.1; Fannie Mae Selling Guide. Ask your loan officer exactly how they'll calculate it for a specific property.
Renovation loans: finance the fixing
FHA 203(k) Limited
Rolls up to $75,000 in repairs and improvements into your mortgage. It's meant for non-structural work like kitchens, flooring, roofs, and systems.
Source: HUD, 203(k) Rehabilitation Mortgage Insurance Program TypesFHA 203(k) Standard
For bigger, structural renovations. There's a $5,000 minimum in repairs, and the total has to stay within the FHA loan limit. A HUD consultant is part of the process.
Source: HUD, 203(k) Rehabilitation Mortgage Insurance Program TypesFannie Mae HomeStyle Renovation
A conventional option that also works with the 5% down rule on 2–4 unit principal residences. Ask your lender about eligible project types and contractor requirements.
Source: Fannie Mae 5% down on 2–4 unit principal residences, effective Nov. 2023 (summary: The Mortgage Reports)Renovation loans take longer to close and require contractor bids up front. They pair well with a fixer 2–4 unit where you live in one unit while the others are brought up to rentable condition.
The cash you'll actually need
The down payment is only one piece. Plan for closing costs, prepaid taxes and insurance, and reserves, which is money left in the bank after closing. Some loans require reserves, and a 2–4 unit property needs them regardless. Ask your lender for a written estimate of total cash to close on a specific property.
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