FHA Loan on Duplex - Vacancy/Move in Requirement

8 Replies

Hi everyone, I've been trying to find my first real estate investment and am planning to house hack a duplex and finance using FHA. Live in one unit, then rent out the other. However, the ones I'm seeing are fully occupied and the owner doesn't want to deliver one unit vacant. As a result, I've been losing out on opportunities for the past 8 months. I looked up the FHA requirements and it seems they only require that the borrower occupies the property within 60 days of closing. In this regard, can I buy a fully occupied duplex, evict one tenant on my own, and occupy before the 60 days is up? Or would one unit really need to be vacant upon closing? Your help is much appreciated!

I am closing on a duplex with FHA, but one side is vacant. We did look at several, but due to the above issue we passed for this one.

I would check your local and state tenant laws to make sure you don't do anything illegal. Maybe do a cash for keys and offer a bit for one tenant to leave?

Good luck!

Thanks @Andrew Meyer

Sorry for not responding sooner. I ultimately went with conventional financing and have agreed on an exit date for the tenant. 

How are things looking in Indiana? I'm considering out-of-state investing after I get my first deal fully under my belt. 

Our house hacking is going very well! Where we are it is somewhat tight to get good returns. I've seen several properties that have some promise,  but I'm in the process of building up cash for down-payment. If your interested in investing with a parner in the area, send me a msg and I can send you some of the numbers I've been looking at.

@Grace D. I'm currently going through a similar situation.  Did changing to a conventional loan eliminate the 60 day occupancy requirement?  I have been told that so long as the property will be a primary residence the 60 day move in requirement is still applicable, otherwise a commercial loan is necessary.  I'd love to get your thoughts here, as I said I'm going through this currently.


Just me, but if you have a unit with no lease, and by law can give 30 days notice to vacate, I wouldn't be concerned if the tenant failed to vacate, had to evict, and I went beyond the 60 days, as long as you're using "best efforts" to comply,  but that's just a personal opinion.

@Wayne Brooks in my case there isn't a vacant unit however my lender will not generate the loan unless there is proof from one of the current tenants that they will agree to terminate their lease.  My thought process here as this starts the relationship off on the wrong foot and could generate a number of problems down the road.

Right now I'm just brainstorming to determine the best way to proceed with putting an offer on this property. As of right now it seems that I would have to incentivize the current tenants to leave ("cash for keys") or perhaps contact the seller to inquire about different options.  Perhaps seller financing? 

Any thoughts?

@Jon Rusnak The 60-day requirement is still applicable, I think the lender will have you sign a statement that you will occupy within 60 days. They may ask for a written statement from the tenant, but they didn't in my case. Cash for keys may be a good option - but I think you can only do that after you've bought the property. Perhaps you can ask the seller to do it for you and add it on to the purchase price. In my case, though, the market was competitive and sellers didn't want to have to bother with vacating the unit. Me taking care of vacating the unit was my primary advantage among the other offers.

@Andrew Meyer Great to hear your house hacking is going well! :) I, too, am rebuilding capital for the next investment. I'm interested in the numbers you're looking at, though. Please PM me if you have time. Cheers!

I had a similar experience in the state of MA and lost a home due to tenants still being in all units. The banks I dealt with required that at least one unit be vacant. They will not close on the property if there isn't a spot for you to live. 

Keep pushing the sellers to have one of the units vacant. If you give the right price (and sometimes enough time; extending closing) they will accept!