FHA Loan Owner Occupancy

4 Replies

Hey BP,

First time poster, long time reader. I am currently living with my parents but am considering purchasing my first home using FHA financing.I understand that FHA requires "owner occupancy" for at least one year, but the question I have is:

Can I use FHA financing to acquire a property while still living at home? I am thinking of buying a 4-plex, but instead of renting out the 4th unit that should be mine, it will be vacant.

How can I utilize this loan product while living at home?

All info and tips are appreciated in advance.

Thanks to all!

@Evan Manship FHA requires you to move in within 60 days and occupy it for 1 year. They do random Lexus Nexus searches to see who's name the utilities are in, where your mail goes, ect. By not completing these requirements it is mortgage fraud.

Why would you leave a unit vancant and lose money and still live at home?

Well, my thought is that those who conduct said inspections would be much more suspiscious if all 4 units of a 4-plex I buy are leased (obviously not owner occupied).

A friend of mine will be doing the same thing, and he and I are wanting to stay in the same place hence my idea that if I don't lease it out, utilities are in my name, etc., would I technically be breaking any rules?

Originally posted by @Evan Manship : would I technically be breaking any rules?

Yes, as previously said, it's mortgage fraud you aren't occupying it as your PRIMARY RESIDENCE and you could be charged criminally. Either buy as an investor or live there for a year. It would need to be your primary residence to avoid this, you can't just leave a unit vacant.

Mortgage fraud is a serious crime, and one punished by significant penalties. Because mortgage fraud can involve different crimes at either the state and federal level, the potential penalties associated with the crime differ widely. Mortgage fraud is typically charged as a felony offense, but misdemeanor crimes are possible in cases where only a small amount of money is involved, typically less than about $1,000.

  • Prison. Prison penalties for mortgage fraud can be significant. A conviction for federal mortgage fraud charges can result in a federal prison sentence of 30 years, while state convictions can last a few years or more. Misdemeanor fraud convictions can bring jail sentences of up to a year.
  • Fines.Fines for mortgage fraud are often extremely high, especially when professional fraud is involved. A conviction for a single count of a federal mortgage fraud can result in a fine of up to $1 million. State fines can range from a few thousand dollars for a misdemeanor convictions to $100,000 or more for felony convictions.
  • Restitution. Mortgage fraud convictions often include restitution payments as well. Restitution is different than a fine, though they both involve money. Restitution is designed to compensate the injured party for your wrongdoing, while the government imposes a fine as a penalty. If, for example, you are convicted of mortgage fraud after you make false statements when applying for a mortgage, you may have to pay restitution to the lender in addition to your fines.
  • Probation. Probation sentences can be imposed for a mortgage fraud conviction separately from, or in addition to, fines and prison sentences. Probation sentences for mortgage fraud typically last at least one year, but longer terms are common. Someone on probation must meet specified court requirements, such as making regular reports to a probation officer, submitting to random drug testing, and refraining from committing other criminal acts.

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