Purchasing a property to rent illegal??

Question

I spoke on the phone with a mortgage lender from Rocket Mortgage. When I told him my intention to purchase a property with the plan to rent it out in the future, he told me that was illegal and fraudulent. I've never heard this before! Does anyone know where he's getting this from or what he means by this? Please advise! I'm baffled.

Nicholas L. · Answer

@Celena Lathrop

i'm assuming he was speaking to an owner occupant lending product that requires you to live there.

you get better mortgage terms for owner occupancy.

Matt Devincenzo · Answer

Are you buying a personal residence to live in? And then you plan later to convert it into a rental? Then you are ok as long as you meet the occupancy guidlines, which typically mean you need to live there for 12 months. He may be assuming you are buying it without the intention of moving in for the 12 months.

Zachary Ware · Answer

I think there was likely confusion between what you were looking for. There are different types of loans and some require you live there, Owner Occupied, others do not. If you are getting a FHA loan on a home and putting down 3.5% you have to intend to live there for 12 months. Here is an article from RocketMortgage going into more detail (https://www.rocketmortgage.com/learn/owner-occupied). Alternatively, there are loans that are specific to RE investing such as DSCR loans.

While it is generally not fraudulent, it can be if you get a mortgage that is only intended for owner-occupied properties. Make sure you know what product you are looking for when shopping for loans. Working with an experienced Mortgage Broker can make the process easy.

Purchasing a property to rent illegal??

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