Question with Airbnb

8 Replies


I have a friend in Orlando, FL wanting to buy a townhouse 12 mins away from Universal Studios.  He plans to rent it out with Airbnb.  He is noticing that most investment properties ask for 20% down for a loan from the bank.  He is thinking about saying he lives there sometimes (which he will) and buying it as an owner occupant in order to only pay 5-10% down for the property.  Are there any stipulations that he needs know or look out for in order to not get caught with fraud?  HELP!!

To live there it must be his primary residence. Otherwise it’s considered a sean home and needs 20% down.

Updated about 1 year ago

*second*, not sean


One of the investors I just sold a property to, bought a single family with a detached unit. They financed as a second home and are goi v to use the detached/studio for themselves and AirBnB. They were only required to put down 10%

@Devin Scott for your friend to use an owner occupant loan the property will need to be his primary residence. Just living there sometimes does not mean primary residence. Generally speaking a primary residence is where one lives most of the time. There are exceptions if one has a reasonable reason acceptable to the lender. He will be required to list his housing history on the loan application along with a list of real estate currently owned. He will also have to fill out the questionnaire at the end of the application about his intended use for the property. Lying on the application is mortgage fraud. 

If asking for a second home mortgage lenders will have a minimum distance restriction. He will have to ask the lender what the minimum distance from his primary residence that they will allow for a second home purchase. 

When it comes to not getting caught committing fraud, Don't Commit Fraud. In lending everything has a paper trail down to the smallest detail. All of the third party providers involved in the transaction have the responsibility of making known any part of the transaction that has been misrepresented once the misrepresentation becomes known to them. 

It may help lower the cash requirement as closing if it can be negotiated that the seller pay all of the non-lender closing costs and then the maximum amount of closing cost contribution toward the lender's closing costs allowed by the lender. If there is any contribution money left over buy points to lower the interest rate. Buyer demand is high in our market so this is probably only realistic if your seller is fairly motivated to get rid of the property. 

The best of luck to your friend. 

@John Kent thank you for your reply!  He is currently under a 17 month lease with 12 months left in an apartment.  He travels a lot and will also use the place for family when they come to visit very often.  So he will be frequently in the new place but when it is rented out with airbnb he will stay at his other apt.  Is there anyway he can get away with doing that or is it considered fraud since it may not be primary residence if the place gets booked up and he stays at his apartment while booked.

@Devin Scott have your friend call a mortgage broker and explain his living situation. If the underwriter is willing to classify the subject property as his primary residence then he is good to go. If he has an uncommon circumstance that he would like considered only the lender can provide a worthwhile opinion. However, lying on the mortgage application is always fraud so he should complete the application honestly. 

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