You can buy a Chicago two-flat with an FHA loan and 3.5% down as long as you live in one of the units. In 2026 the FHA loan limit for a two-unit building in Cook County is $693,050. Lenders can count up to 75% of the expected rent from the other unit toward your income.
Last reviewed September 28, 2026 · Chicago First Time Home Buyer editorial team
At a glance
| Minimum down payment | 3.5% |
| Occupancy | You must live in one unit as your primary residence, generally for at least one year |
| 2026 FHA limit, Cook County | $693,050 for 2 units; $837,700 for 3; $1,041,125 for 4 |
| Rental income counted | Up to 75% of the lower of the appraiser’s fair market rent or the lease amount, for units you will not live in |
| Extra test for 3–4 units | Self-sufficiency: net rent from all units must cover the full mortgage payment |
| City HomeGrown grant | Available for two-unit buildings; not for three- or four-unit buildings |
How the rent helps you qualify
If the building has no rental history, the lender uses 75% of the lower of the appraiser’s market rent estimate or a signed lease. The 25% haircut allows for vacancy and upkeep. FHA allows projected rent even if you have never been a landlord, as long as it is documented.
Why three- and four-flats are harder
For three or four units, FHA adds a self-sufficiency test on HUD Form 92561. The lender takes the market rent for every unit, including yours, and subtracts the larger of a vacancy and maintenance estimate or 25%. What is left must cover the full monthly payment, including taxes and insurance. The test is harder to pass when rents are low compared with the price, and three- and four-unit buildings are also outside the HomeGrown program.
Common questions
Can a first-time buyer get an FHA loan for a two-flat in Chicago?
Yes. FHA allows two- to four-unit homes with 3.5% down, as long as you live in one unit.
Can I use the HomeGrown grant on a two-flat?
Yes. HomeGrown covers two-unit buildings. Three- and four-unit buildings are not eligible.
Can I rent out my unit later?
FHA generally expects you to live in the home for at least a year. HomeGrown requires five years as your primary residence, so check both before planning to move out.