FHA occupancy rules. Need advice

34 Replies

Another vote for your mortgage rep being an idiot.  But for a different reason.  There are other ways to get around that 25% down payment LEGALLY, and she should know them.

@Richard C.  Haha she was nice. And again, it was my first one so I didn't have a clue what was going on. I have moved on to other reps now. I don't think she understood what I am trying to do.

Hello All,

This post is super interesting and is also a prime example of why the lending industry need to fix these gray areas. 

Everyone that posted on here could have an argument either way but the only way to truly protect yourself is to live in the property for one year.  Now they're exceptions like job relocation or maybe your going to have a baby or two and need more space.  It's tough to get this through but if you document it all correctly you won't have an issue.

In conclusion I would strongly recommend that you stay in the property for 1 year or if you buy another property make sure it's labeled as a second home ( 10% down ) or an investment home which is at least 20% down.


The FBI doesn't mess around and it's not worth it. Just don't label the new home Owner Occupied and stay in the FHA home for 1 year unless you have to relocate or need more room for an expanding family.


That is how I would approach an FHA loan.

I hope this helps. 

@Brie Schmidt  Account Closed 

Just got off the phone with a mortgage rep that experienced this situation. The client went to jail for 18months and was fine 25k.. Also the government came after the mortgage rep as well. I think this discussion is over. 

Hello all,

Just wanted to re-open this discussion. My questions have been nearly all answered (thank you @Brie Schmidt especially). 

I'm looking to purchase a triplex with an FHA loan in the Albany, New York area. I currently live and work in Albany, however I've been considering moving to New York City (150 Miles away). If I purchased a house in December/January, and a job opportunity arose in the summer would I be committing any type of fraud? I am not set on this move and I do not have a job lined up, so I don't feel as though I'm lying in any way. I would continue to own the home and use it as a rental. If necessary I could keep the unit I'd be technically "owner occupying" empty for myself even though I wouldn't be using it.

Thanks for any help you can offer!

No, I don't think so...bc at the time of purchase your intent was to occupy the property. 

From my understanding as long as you did not enter into the mortgage knowing you were definitely moving than you are ok.  

Sounds great, thanks!

Would I be able to move and rent out all units before 1 year if I am accepted to college and have to move over 100 miles away?

@Brie Schmidt was very informative, Thank you. My situation is one that i cant find any comment on from HUD or FHA. My wife and I are first time home buyers and will be closing on a duplex in the next few weeks. We fully intend on living in one side and renting the other. However my, wife is pregnant with our first child and will be REALLY pregnant durning the first 60 days after closing. The living levels of the dueplex are on the 2nd floor requiring my wife to climb stairs. She also has a bad knee which has not been a problem for her climbimg stairs sofar but shes been complaining of it hurting her more lately due to the additional weight she is carring(my future son).

My concern is that after we move in, if it becomes impossible for her to climb the stairs, and we have to move out, would the FHA call the loan or prosecute for fraud? Keep in mind that we are NOT positioned finacially to purchase another home. So we are not looking for additional financing like other posters are. So we are not trying dress up alterior motives here.

Im not even positive that my wifes pregnant kness will be a problem. The reason for my research is i know what my options are if we cant maintain occupancy during the first year. I live in a resort community that was just ravaged by a cat 4 hurricane so finding housing to rent would a big enough problem. I certainly dont want to add a mortgage fraud charge to it. 

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