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Can I rent a home if I just bought it with an FHA loan?

One of the conditions is to occupy the home, right? by telbij884 from Fulton, Indiana. Jul 10th 2020 Reply


David R Youngs - Assistant Vice President (DavidRYoungs)
#2 ranked lender in Minnesota - 83 contributions

You are correct. An government insured HUD-FHA loan is only allowed on a home that will be occupied as a primary residence. At closing you would sign an "Occupancy Agreement" that states you intend to live at the property as your primary residence for a minimum of 12 months. Of course there are extenuating circumstances that could force a person to turn this into a "non-owner occupied" property sooner. One example could be an unexpected job transfer to another city or state, preventing you from occupying the home as your residence. However occupancy is one of the greatest types of loan fraud there is and something underwriters and auditors watch for very closely. So a person wants to be sure that if they are using FHA financing, they do in fact intend to occupy the property. In order to know whether you would have the option to rent the property, you would want to speak to your Loan Officer. Explain your plans & intentions, to determine whether you would meet the requirements to qualify for an FHA loan in your situation. This may be more of an answer than you were looking for, but I hope this helps! If you have further questions, feel free to reach out to me at 651-497-6770 or email me at dyoungs@progressivels.com. Thanks for the question!

Jul 10th 2020
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Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 1,904 contributions

David is correct. Doing what you are thinking about doing is called Mortgage Fraud. FHA and VA loans are only for owner occupied borrowers as a primary residence. However, even if you do get a job transfer that takes you out of town, when the lender finds out, AND THEY WILL, an investigation will likely occur and if it is learned that the job transfer had been floated, discussed, offered, hinted at, etc., BEFORE you closed escrow, then your intent to buy the home for a primary residence becomes tarnished. About ten years ago, I had an acquaintance that did what you are talking about but did not have the job change, he just decided the commute was longer than he wanted and moved back to his old home. The bank filed a fraud claim against him. When it was over, he lost his house and the equity in it and was sentence to five years for mortgage fraud and ordered to pay restitution to the lender. BUT if you closed escrow with the intent to occupy and you actually moved in and THEN a job transfer or a job offer appears that moves your new work more than 50 miles from this new residence, you should be OK ~ Bert Carpenter, The LoansA2z Team of NEXA Mortgage ~ NMLS 40586 ~ Licensed in Arizona, California, Georgia, Oregon, and Washington. Need help in other states? We got you covered. NEXA Mortgage is licensed in 46 states ~ www.ApplyYes.com 480-889-9000.

Jul 10th 2020
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