Can i rent my house out?? Question about owner occupancy

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Can i rent my house out?? Question about owner occupancy

Austin Sanne
Norfolk, NE · Member since 2016 · 11 posts · 0 votes

Ok i am just curious about the owner occupancy guidelines on a fha loan...it says you must reside in the property for atleast one year..ok ive been in the house for 4 years so im not worried about that but then i found out that the loan is backed by NIFA ( nebraska investment finacial authority) and they say you must be in the home for the life of the mortgage but they state that if you dont occupy the home for a continuos year all that happens is you cant deduct the interest on the mortgage for income tax purposes..but it in another spot it also says they might be able to foreclose or want full payment of loan if your found to not be the occupant..so can i rent my house out or what?? i didnt commit fraud as ive been in the home for 4 years..and will they even care beings the payments are still being made? also i would be keeping the 2 car garage as storage with items of mine in there...would renting the house cause serious problems or would i be ok?? please help!

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Brian Egr
Flipper/Rehabber · Lincoln, NE · Member since 2016 · 144 posts · 71 votes
9y
Sounds like they have an alienation cause in the loan, so yes they could request payment in full on the loan if you are not and owner occupant. Chances are they wouldn't, but they could if they wanted to. Why don't you just refinance to a conventional loan and rent the house out?
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  • Brian Egr
    Flipper/Rehabber · Lincoln, NE · Member since 2016 · 144 posts · 71 votes
    9y
    Sounds like they have an alienation cause in the loan, so yes they could request payment in full on the loan if you are not and owner occupant. Chances are they wouldn't, but they could if they wanted to. Why don't you just refinance to a conventional loan and rent the house out?
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  • Austin Sanne
    OP
    Norfolk, NE · Member since 2016 · 11 posts · 0 votes
    9y

    If i were to refinance would that mean i would have to wait another year before i could rent it out? also my credit  isnt as good as it once was and i need to build it back up..would that provent me from a refinance? ive never had to refinance anything before

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  • Brian Egr
    Flipper/Rehabber · Lincoln, NE · Member since 2016 · 144 posts · 71 votes
    9y

    No if you refinanced with a conventional loan you wouldn't have to wait a year to rent it out.  Refinancing is pretty easy, all you are doing is getting a new loan to replace the loan you have now.  As far as your credit worthiness that's up to your banker to decide if he want's to execute a loan or not.

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  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    9y

    @Austin Sanne, so long as you now have 20%+ equity according to your Lender's new appraisal, you should be good to go for a refi. It might be worth Lender-shopping to see what their fixed interest investment mortgage rates are (likely no higher than what you're paying now anyway). You'll end up with roughly the same loan amount (with no Mortgage-Insurance requirement), AND you can re-start the FHA-Loan application process for your NEXT primary! How good's that?...

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  • Kevin Siedlecki
    Investor · Madison, CT · Member since 2014 · 710 posts · 458 votes
    9y

    @Austin Sanne - I don't understand how they can say you can't write the interest off on your taxes. Once you turn the house into an investment, the interest becomes deductible as an investment expense. If it were a second home or vacation home, then I could not being able to take the interest deduction. Refinancing is definitely an easy option, either way, though. You've been there long enough to have a little equity, and rates are still low. Good time to do because you will either be able to take some cash out or lower your payments in addition to getting out of the terms of your first loan,

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  • Shawn Devoid
    Real Estate Agent · Tucson, AZ · Member since 2016 · 168 posts · 106 votes
    9y

    Hi @Austin Sanne, I just looked up NIFA, as it sounded like it may be similiar to first-time home buyer programs we have here in Tucson.  I have a couple of questions for you.  Have you already moved out?  What's your plan, regarding where you plan to live (owned vs rent)?  Basically, what's your motivation for wanting to rent the house out?  The NIFA guidelines clearly state that you may not rent the home out.  I would get with a NIFA lender and discuss your options.  Basically, you traded the freedom to rent out your home for a lower interest rate and perhaps down payment assistance when you purchased the home.  I hope this helps!

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  • Austin Sanne
    OP
    Norfolk, NE · Member since 2016 · 11 posts · 0 votes
    8y

    Thank you all for the input on this .Everything has worked out pretty well. Bank is just happy to keep receiving payments each month and i receive cash flow and now im ready for next adventure :)

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