Can you rent out an FHA financed property?

12 Replies

Hi there!

I have a unique situation where I live in a student cooperative (for around 3 years) that my roommate currently owns. There are currently seven roommates. I am going to purchase the property from her and would want to continue to rent out to those roommates. I am getting unclear answers about FHA loans and the ability to rent it out, so I was wondering if you guys could help me out.

Thanks so much! 

Are you going to continue to live there? If so, then I'd say yes, no problem. 

Technically you aren't allowed to rent out homes backed by government loans, but it is done all the time. In your case, you are living there and renting out rooms, which I do not believe is a problem for FHA.

Originally posted by @Matt Motil :

Are you going to continue to live there? If so, then I'd say yes, no problem. 

Technically you aren't allowed to rent out homes backed by government loans, but it is done all the time. In your case, you are living there and renting out rooms, which I do not believe is a problem for FHA.

 Thanks so much Matt! Is it not a problem in the way that I can tell the loan officer that there are extra roommates that I will be renting out to, or will that hurt my chances of getting the loan? Or would they not require that information from me?

I'm actually about to purchase a quad with an FHA loan. My lender actually was suggesting I use the FHA for down payment purposes (I won't need to and may still go conventional for mortgage insurance issues). Anyway, I disclosed renting from the beginning and I'm using current rents to offset the income requirements. So from my experience, It's not a big deal at all if you're planning to live there as you are.

Originally posted by @Pete Krentz :

I'm actually about to purchase a quad with an FHA loan. My lender actually was suggesting I use the FHA for down payment purposes (I won't need to and may still go conventional for mortgage insurance issues). Anyway, I disclosed renting from the beginning and I'm using current rents to offset the income requirements. So from my experience, It's not a big deal at all if you're planning to live there as you are.

 Thanks for sharing that! It makes me feel a lot better disclosing that information. Good luck with the quad :)

@Hae-Yuan Chang  FHA requires that you owner occupy the property for at least 1 years. So you want to be sure that you will be in school for at least that long.

Folks buy 2-4 unit properties all the time using FHA. Live in one unit and rent out the other. So I don't see an issue with you renting out the rooms. The only question would be is would you be allowed to use the rental income to qualify for the purchase.

Given that you are a student, do you have the income to support the purchase? Have you had that income for 2 yrs?
Originally posted by @Upen Patel :
@Hae-Yuan Chang FHA requires that you owner occupy the property for at least 1 years. So you want to be sure that you will be in school for at least that long.

Folks buy 2-4 unit properties all the time using FHA. Live in one unit and rent out the other. So I don't see an issue with you renting out the rooms. The only question would be is would you be allowed to use the rental income to qualify for the purchase.

Given that you are a student, do you have the income to support the purchase? Have you had that income for 2 yrs?

Good morning Upen! My mom is going to be using her credit and income! Then I will create a payment schedule to pay her back plus interest.

Using your Mom's credit and income is a totally different scenario than you buying a 2 or 3 unit. 

Mom would be a non occupant co-borrower and the qualifications are different for you. She could do this as a non owner, but the down payment would be 15% with FHA.