FHA owner occupy requirement. One year or majority (6 mos).

[Jeff Brower]

Hey all,

In the thread below we are discussing what the requirement is for owner occupying an FHA 3.5% down loan. I am saying 1 year, but I have some others claiming you can move out after 6 months because the they say the requirement for principle residence is the 'majority of the year'. I say that if you sign the mortgage saying you will live there for one year but intend to move out after 6 mos and 1 day, that would be mortgage fraud.

https://www.biggerpockets.com/forums/311-buying-selling-real-estate/topics/367899-bought-my-first-multi-unit-property---now-how-do-i-buy-my-next?page=1#p2336944

My argument is below:

Thanks tyler but I do not see anywhere in those links that says the occupancy requirement can be dropped after 6 months. I see the second link and hud definition states the 'majority of the calendar year'; but I do not think that is what the meant. I think that statement is more to do with 'primary/principle residence' definition vs duration. To me this means that to use an FHA loan, you must live there for 51% of the TIME (IE 4 days of the week), not 51% of the year requirement and then sell it (or move out) after 6 months. I have never heard anybody say you can move out after 6 months if you are signing that you will occupy the property for a year. To most on BP, that is considered mortgage fraud. I hope some others will chime in on this....

The first link states:

Establishing Occupancy

The FHA requires you to occupy the home within 60 days of signing the loan security instrument, and "bona fide" occupancy must continue for at least one year, according to the FHA. Because you can only live in one home for a majority of the year, the FHA prohibits a borrower from having more than one loan at a time, with certain exceptions. After the initial establishment of owner occupancy, nothing prevents you from moving out of the home and renting it, unless you want another FHA loan.

The second link states:

Principal Residency Requirement

When you take out an FHA loan, it's based on the understanding that the home will be your primary residence. This means you have to live in the home for the majority of the calendar year. FHA guidelines require you to establish occupancy within 60 days of buying the home. You also have to sign the mortgage note before the property is considered to be owner-occupied. If you're married, only one of you has to actually occupy the home to qualify.

4155.1 4.B.2.a

Definition:

Principal

Residence

A principal residence is a property that will be occupied by the borrower for the majority of the calendar year.

Can someone clarify?

@tyler ansell @brent coombs