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Straight Up Chicago Investor Podcast Episode 185: What Chicago House Hackers Need To Know About Updated FHA Limits

Straight Up Chicago Investor Podcast Episode 185:  What Chicago House Hackers Need To Know About Updated FHA Limits

We sat down with Chris Puleo, Producing Area Manager of The Puleo Group to talk about the hot topic of FHA limits being increased effective January 1, 2023.  With property values rapidly rising over the last few years the Federal Housing Administration is raising lending limits to keep pace with home price inflation.

The Federal Housing Administration (FHA) helps first-time homebuyers and those with low to moderate incomes purchase a home. FHA loans are insured by the government and offer many benefits, such as lower down payment requirements and more lenient credit standards.

Questions We Answer In this Show:

Q. What is the FHA Self Sufficiency Test?

A. On 1 and 2 unit properties in Chicago, the self sufficiency test does not apply, however on 3 and 4 unit properties the test does apply. You take ALL unit market rents, or current rents (whichever is lower) multiply it by 75% and that is the max mortgage payment you can have which then dictates the down payment. 

Q. Can I still put 3.5% down on 1 and 2 unit buildings in Chicago?

A. On 1 and 2 unit FHA purchases you can put 3.5% down but on 3 and 4 unit properties you can only if that payment passes the self sufficiency test. If it does not then the max loan amount would be calculated. 

Q. Are 3 unit buildings in Chicago harder to pass the self sufficiency test then 2 or 4 unit buildings? 

A. Yes. This really is dictated by the market. The Illinois market, due to high real estate taxes, makes it more difficult on a 3 unit. Basically in Illinois. or other states with high tax rates, one unit’s rent just covers the taxes in the test making it more difficult. In states that have more controlled real estate taxes 3 units are much easier to obtain lower down payment FHA financing. 

Q. Would it be smart to take a cash out refinance right now if I still live in my multi unit? 

A. Maybe. There is market equity from the past couple years so it is actually a great time to take cash out even to sit on for your next investment. This way you have options in 6 months to either use conventional financing or refinance as rates come down. If you don't want cash out, realize you cannot have two FHA loans at once, so even though rates may be higher, if it is about down payment on your next hack, you really need to convert your FHA loan to conventional. So there are a number of reasons to discuss whether or not you should refinance with me.  

Q. Does The Puleo Group lend in other states outside of Illinois? 

A. Yes, Our company is licensed in 44 states currently and I am either licensed or have licensing pending in over 30 states so I can take care of 98% of the clients on this podcast. 

Q. How can I get a hold of Chris Puleo from The Puleo Group to discuss more about how this can help me?

A. Multiple ways but my cell phone is always available at 630-742-3198 or my email at You can also find me on Facebook, Snap, and TikTok at handle @cpuleo9710, also visit my web site at 

Show Notes:

  • Guest Name: Chris Puleo

  • Guest Company: Neighborhood Loans

  • Guest Website:

  • Guest Email:

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