Real Estate Agent · Slidell, LA · Member since 2018 · 28 posts · 11 votes
Im looking to refinance from my fha to conventional loan so that I am able turn my primary residence into first investment property. I have already fufilled the 12months as my primary residence as fha requires. Does conventional loans require me to live there a certain amount of time before I can rent the property?
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
5y
@Darryn Oliver If you have already lived there for the required one year, you do Not have to refi out of the fha to turn it into a rental...you are good to go after your one year.
If you Do decide to refi into conventional at some point, if you don’t have 20% equity you will Still be getting an owner occupied conventional loan, not an investment loan, so you’d have to live there another year.
Investor · San Diego, CA · Member since 2019 · 326 posts · 266 votes
5y
No you do not have to live in for a certain time for conventional. You have to make sure it makes sense equity wise to refinance. Some lenders require a certain amount equity in place. Talk to different lenders and see what they require. Shop for the best deal.
Realtor · Portland, ME · Member since 2015 · 655 posts · 552 votes
5y
If you have already lived there for 12 months then there isn't going to be any other seasoning period to refinance. As others have mentioned, your challenge is going to be having the required equity in the home to refinance into a conventional loan. Most likely, the best case scenario for a refinance will require an 80% loan-to-value. So if you have a home that is worth $100k, you can only refinance for $80k as the bank wants there to be a certain amount of equity in the property. So, assuming you put down 3.5% and you had 3.5% equity at the time of purchase, you will have needed to gain an additional 16.5% equity through some combination of either natural appreciation and/or forced appreciation. It's possible but you'll want to speak with different lenders to find someone offering 80% LTV and the rest will be left in the hands of the appraisal.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
5y
@Darryn Oliver If you have already lived there for the required one year, you do Not have to refi out of the fha to turn it into a rental...you are good to go after your one year.
If you Do decide to refi into conventional at some point, if you don’t have 20% equity you will Still be getting an owner occupied conventional loan, not an investment loan, so you’d have to live there another year.
Aurora, IL · Member since 2019 · 125 posts · 39 votes
5y
There is no point in refinancing if everything is going well. You can rent out the house and still have an FHA loan on the house. Also, a conventional loan doesn't require you to live there for a year as an FHA loan requires
Investor · Cleveland, OH · Member since 2019 · 147 posts · 156 votes
5y
Just a repeat of what others said, but as long as you've lived there for a year you can move out and rent the house out. However, if you want to refi you'll have to make sure you're at at least 80% leverage. So you'd need to appreciate past your initial 3.5% leverage using forced appreciation or just paying down the loan.
Realtor · San Antonio, TX · Member since 2017 · 64 posts · 35 votes
5y
@Darryn Oliver As far as I understand it, you wouldnt have to refi out of an FHA unless you want to buy your next house with an FHA, since you can only have one FHA loan at a time. I did a cash out refi out of an FHA on my first property because I thought I'd do another FHA but I ended up doing a 5% down owner occupied conventional, because the house didn't qualify for FHA (pre-1978 house with peeling paint and needed a new furnace). Best of luck!
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
5y
Depends on the loan product. I’ve had clients here in CT get lower money down conventional owner occupied loans that still have the live in it for a year condition.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
You can get owner occupied and non-owner occupied conventional mortgages. If you refinance and claim owner occupancy, odds are good you will be required to live in the property for a year as terms of the mortgage. Disclose your actual intent to the mortgage broker. If you plan to live there for three months, then convert to a rental, tell the broker that so they match you to the right loan product. Just be aware there are different rules for equity requirements on non-owner occupied properties.
Rental Property Investor · Chandler, AZ · Member since 2018 · 5 posts · 2 votes
5y
@Dan Weber
I have a question for a different scenario. I’ve been offered a 5% down conventional through my lender. Am I required to live in that house until a certain equity is met? Do I have to pay mortgage insurance until a certain equity is met? Both?
Realtor · Portland, ME · Member since 2015 · 655 posts · 552 votes
5y
@Jarred Jones you do not need to live there until you meet a certain equity. Most owner occupied loans have a stipulation that you need to live there or INTEND to live there for 12 months. However, in order to ditch the mortgage insurance, you do need to reach the 80% loan-to-value threshold.