Iowa City, IA · Member since 2015 · 14 posts · 0 votes
I realize it's not how your supposed to do it (idk legality) but has anyone bought a second home to get the 5% down payment instead of the 20% down payment it costs for an investment property?
I'd obviously rather do the 5% down and get the better interest rates. But at the same time, next year when I'm doing my taxes and need to claim ownership of a house that I'm getting an income from....and I get red flagged and in trouble...that'd suck.
Any experience or insight in this?
Investor · Oklahoma City, OK · Member since 2016 · 98 posts · 51 votes
10y
If you want to move into the new property and have done your one year residence requirement at your first, you can move into the second and rent the first. I believe you also would have to refinance the first out of fha in order to qualify for fha on the second? You may have built enough equity in the first to be able to refinance to conventional without much added expense. I am new and still learning myself. I hope others who are more experienced will chime in and give you (and me) more information.
I absolutely do not recommend saying you are going to owner occupy (to get good loan rates) and then not do it. That would be considered mortgage fraud!
If you want to move into the new property and have done your one year residence requirement at your first, you can move into the second and rent the first. You would have to refinance the first out of fha in order to qualify for fha on the second. You may have built enough equity in the first to be able to refinance to conventional without much added expense. I am new and still learning myself. I hope others who are more experienced will chime in and give you (and me) more information.
I absolutely do not recommend saying you are going to owner occupy (to get good loan rates) and then not do it. That would be considered mortgage fraud.
Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
10y
@Adam Rees getting an owner-occupied loan with no intention to occupy is called mortgage fraud. You could rent out the home you're in now and move into the new home to get that low down-payment loan, assuming you have occupied your primary for long enough.