using FHA for out of town REI

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using FHA for out of town REI

Crystal Perez
New York City, NY · Member since 2016 · 37 posts · 8 votes

An FHA is the best way to get started for myself but my area is too expensive I would need to invest out of town. Can I still use an FHA stating ti will be owner occupied even though its obvious it will not be my primary residence since my work is elsewhere?

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Logan AllecBusiness Member
Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
10y

No.  What you're proposing is mortgage fraud.  Don't do it.

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  • Logan AllecBusiness Member
    Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
    10y

    No.  What you're proposing is mortgage fraud.  Don't do it.

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  • Crystal Perez
    OP
    New York City, NY · Member since 2016 · 37 posts · 8 votes
    10y
    Originally posted by @Logan Allec:

    No.  What you're proposing is mortgage fraud.  Don't do it.

     What if I leave one of my units empty for occasional use for myself and rent out the other units?

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  • Jerry PadillaBusiness Member
    Lender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
    10y

    @Crystal Perez

    As Logan stated it is mortgage fraud. You will be caught by underwriting and the transaction will never make it to closing. Why not be honest and by a property that will be your primary residence? FHA allows you to use rental income towards your purchase. There are further requirements for a 3-4 unit FHA property that I would be glad to PM you more info on.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    10y

    If you're getting an FHA OO loan, you MUST move into the place. Period. Anything else is mortgage fraud.

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  • Crystal Perez
    OP
    New York City, NY · Member since 2016 · 37 posts · 8 votes
    10y
    Originally posted by @Jerry Padilla:

    @Crystal Perez

    As Logan stated it is mortgage fraud. You will be caught by underwriting and the transaction will never make it to closing. Why not be honest and by a property that will be your primary residence? FHA allows you to use rental income towards your purchase. There are further requirements for a 3-4 unit FHA property that I would be glad to PM you more info on.

     Hello Jerry,

    I am new to investing and do not know what the FHA regulations are. I would glady appreciate if you can PM the information.

    Thank You!

    1Reply
  • Brandon Beale
    Real Estate Investor · Davis, WV · Member since 2016 · 62 posts · 13 votes
    10y

    fha.gov

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  • Brandon Beale
    Real Estate Investor · Davis, WV · Member since 2016 · 62 posts · 13 votes
    10y

    Correct me if I'm wrong but you have to live in at least one unit for a year, correct?

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  • Ricardo Meza
    San Jose, CA · Member since 2016 · 58 posts · 19 votes
    10y

    I think you're correct @Brandon Beale.  But I've also heard of people working with the bank after 6 months, maybe less, with a change of circumstance argument.  But this still raises the question of ethics.  

    1Reply
  • Viv James
    Los angeles, CA · Member since 2016 · 10 posts · 0 votes
    10y

    fha.org and here's an article on it

    http://library.hsh.com/articles/homeowners-repeat-buyers/occupancy-fraud-risks-not-worth-the-rewards.html

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  • Keith Pentz
    Real Estate Agent · Worcester, MA · Member since 2015 · 53 posts · 23 votes
    10y

    @Brandon BealeFrom the FHA Guidelines (they actually just updated for clarification)

    5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower’s Loan Application; Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower’s principal residence within sixty daysafter the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Property) and shall continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless Lender determines this requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are beyond Borrower’s control Borrower shall notify Lender of any extenuating circumstances. …

    2Reply
  • Brandon Beale
    Real Estate Investor · Davis, WV · Member since 2016 · 62 posts · 13 votes
    10y

    Thanks guys. This is actually a strategy I was looking to employ only with a bit of a twist. There aren't many multi units in my area. So my plan was to buy a house with fha financing, live in it for a year and then either sell it or rent it out. 

    1Reply
  • Robert Andrade
    Construction Trucking Owner / Operator · New Bedford, MA · Member since 2015 · 133 posts · 37 votes
    10y
    Uh... No
    0Reply
  • Keith Pentz
    Real Estate Agent · Worcester, MA · Member since 2015 · 53 posts · 23 votes
    10y

    @Brandon Beale If you you CAN find a multi go FHA Multi family (3 or 4 units) first, then you can but a single family to live in Fannie Mae 5% down and rent out the unit of the the multi you were living in after a yr and a day.

    If you buy a single family FHA first then you are looking at the second house you buy being 20-25% down . Actually that's true even if you went with a Fannie Mae Mortgage on the first purchase. There is just no feasible way unless you can show a job transfer greater than 100 miles to get around it. Keep your money if ya can and make more of it!

    1Reply
  • William Gonzalez
    New York City, NY · Member since 2013 · 13 posts · 0 votes
    10y

    @Crystal PerezEstamos en las mismas, no hay oportunidad en NY para empezar.

    0Reply
  • Brandon Beale
    Real Estate Investor · Davis, WV · Member since 2016 · 62 posts · 13 votes
    10y

    @Keith Pentz I'm not moving anywhere. Love the location I'm in. For someone who loves the outdoors Davis, WV has it all!

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