Getting mortgage on rental property instead of conventional loan

3 Replies

I want to purchase my first rental property with a mortgage instead of a conventional loan so I can take advantage of the homestyle/homeready programs which allow you to include renovations in the loan instead of conventional loans that require 15% down. Is it legal not be forth-coming with the banks in not letting them know you intend to rent the home. I ask because every mortgage broker or bank completely changes the requirements as soon as I mention investment property. I like that conventional loans let you factor in the estimated rent into your approval decision but starting out I can't afford 15% down payments.

It would be mortgage fraud to use an owner-occupant loan with no intentions of occupying the property.

Yes, I know with FHA loan and some other loans it is required that you live there for at least a year and to lie about that is fraud. I was more talking about mortgages without the requirement that you live there for a year. I haven't had much success talking to mortgage broker about it because as soon as I mentioned renting out the property or investment property they change the entire conversation to conventional loans like I no longer qualify for a regular mortgage.