Using FHA for non-owner occupied

4 Replies

Good Afternoon fellow BPers, I am considering using FHA to purchase a Duplex in my area but I have no intentions of living there as I already own a home free and clear. I have the reserves to put down 20% but ideally I would like to hold on to my cash to spruce up the place to increase the rents and purchase another property early next year. The duplex is partially rented so I could say that I will live in the other unit once I purchase the home. My question is how long do I need to leave the place vacant before I am able to rent it out to someone. I am trying to avoid gaming the system by simply changing my address, but I was told by a local investor that he does it all the time. Looking to do this right from the beginning. Thanks

Your intent needs to be to live there for a year or it's fraud.

Your local investor buddy is playing with fire. 

Always keep in mind when we're thinking of breaking the rules that the "bad guy" can get away with it 99 times out of 100, and the "cop" can screw up 99 times out of 100, but at the end of the day the 100th time means that the bad guy gets locked up and the cop who failed 99 times out of 100 is still the one hailed as the hero.

@Michael Veloso

You mentioned - Looking to do this right from the beginning......

Doing this right would be getting a conventional mortgage and putting down the 25% required for a MFR.

How much will you be loosing in potential rental income by leaving a unit or half the house vacant for a year, just to save on a down payment? Not to mention this route will also require upfront mortgage insurance to be paid as well and mortgage insurance that stays for the life of the loan. You are better off not committing mortgage fraud and using the rental income to save up for a down payment on the next purchase.

That was what I was leaning towards to tell you the truth.  I have the reserves to put 20% down but I would rather not touch that piece of our savings.  The houses I am looking at are fairly inexpensive so I will continue to diligently save.  There will always be deals.  Thank you Jerry.

@Michael Veloso keep in mind we live in an internet age. Everyone is looking you up if they are doing business with you.  If a lender googled your name they can get led to your BP profile.  Then, they look at your started discussions and see that your intention was to commit mortgage fraud and they won’t service you.