FHA occupancy rules. Need advice

[Jon Holden]

Hi, this is my first time posting on the forum, hopefully someone can help me with my situation. I live in an owner occupied duplex that I purchased with an FHA loan. I live in one side, and I rent the other side out. The property was purchased in January. FHA mandates that I must live in the unit for 1 year before I am able to rent it out.

The problem is I need to relocate out of state because of my job. Will FHA come after me if I leave 5 months before the 1 year is up? What are the repercussions? I'm mostly worried about what will happen when I switch my insurance to a rental.

[Brie Schmidt]

@Christian Bors - We talked about this before - If you get 2 OO loans in 12 months it could trigger an audit - these are the 3 reasons you can move and get another OO loan without committing mortgage fraud

• Relocation: If the borrower is relocating and reestablishing residency in another area not within reasonable commuting distance from the current principal residence (generally at least 50 miles away), the borrower may obtain another owner occupied mortgage
• Increase in family size: The borrower may be permitted to obtain another home with if the number of legal dependents increases to the point that the present house no longer meets the family’s needs. The borrower must also:
  • Provide satisfactory evidence of the increase in dependents and the property’s failure to meet the family’s needs.
  • Pay down the outstanding mortgage balance on the present property to a 75% or less loan to value ratio, exclusive of any financed mortgage insurance premium.
• Vacating a jointly owned property: If the borrower is vacating a residence that will remain occupied by a co-borrower, the borrower is permitted to obtain another owner occupied mortgage. Acceptable situations include instances of divorce after which the vacating ex-spouse will purchase a new home or one of the co-borrowers will vacate the existing property.