Is this mortgage fraud?

1 Reply

I want to preface this by saying that this scenario is purely hypothetical. Let's say I use FHA financing for a 3/1 SFH. Obviously I have stay in the property for a year but do I have to stay in the property or could I stay on the lot? I ask this because my idea is renting out a house by bedroom to college students (I'm young enough where I don't think it would be awkward if I stayed with college students) and rent all the bedrooms in the house and either: 1) Stay in a small room in the house that may not technically be a bedroom or 2) Stay in my 15' commercial canvas tent in the backyard. Yes - it's a gnarly idea but I have my own stove burner so will stay ~75 in the Winter. Crazy idea, I know, maybe that's why I'm so attracted to it! :) Would this be considered mortgage fraud if I went either of these routes? Also - this may be a question better suited to the Tennesseans as it involves the THDA down payment assistance but I imagine several states Ave something similar. It's said that with the THDA down payment assistance you can't rent the property but does this mean the whole property or can individual bedrooms be rented out if it's an owner occupant? Thanks for the responses!

Right, so HYPOTHETICALLY....

Staying in a bedroom and renting out the others is part of the the classic "house hacking" that gets talked about on the podcast all the time. It doesn't seem that far-fetched to sleep on the couch in the living room (or on one in a very large closet) and rent out the bedrooms. As far as the semantics go, the lot is part of the "property" so you're still occupying the property if you're living on the lot but not in the physical house. I think that part is going to depend on the specific language in the contract. But dude, one bathroom is rough to share between four people in their 20s, so think long and hard about that. 

As for down payment assistance--just call the state agency and ask. You shouldn't have to give your name or anything, and I'm sure they'll have more accurate information that anyone on here can give you.