FHA loan for "secondary" property
Is there any way to legally and ethically have my girlfriend purchase a small multi-family property with an FHA loan even though she lives with me in my primary residence? Shes contributes to the mortgage payment but is not listed on my mortgage, or anything else relating to the property (except the gas bill). She would like to spend most, if not all of her time at our current home.
She will need to live in the property for a year. If she doesnt, then that would be mortgage fraud. While not uncommon for people to do that, mortgage fraud prosecutions are on the rise. In fact the Baltimore States Attorney was indicted for this same crime.
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No, there is not. If she wants to do this "Legally and ethically" then she needs to reside in the home she purchased with an FHA loan for at least a year.
Google "marilyn mosby mortgage fraud" to read about the mess Baltimore's States Attorney is in for claiming owner occupancy on a home she never intended to live in and then your GF can decide if she wants to take the same risk
Unfortunately, you guys could get into some trouble if you wanted to use a FHA loan like that. However, there are a few other low downpayment programs that you could utilize on an investment property. I've seen multiple 10% down programs for investment properties and you could use a concession to get a 2-1 buy down with that to drop your rate if you find the right property.
Hopefully, that helps! Feel free to reach out with any questions
Quote from @Nick Anderson:
Is there any way to legally and ethically have my girlfriend purchase a small multi-family property with an FHA loan even though she lives with me in my primary residence? Shes contributes to the mortgage payment but is not listed on my mortgage, or anything else relating to the property (except the gas bill). She would like to spend most, if not all of her time at our current home.
No.
Thanks for the input! All of that confirms what I was thinking, wanted to make sure I wasn't missing any (legal) loopholes before coughing up a bigger down payment.
I was curious about the details of the Mosby case. Sometimes the press gets things a little off. Not in this case, though. Here's a link to the US DOJ press release and a link to US Code section pertaining to false statements on loan and credit applications. Looks like some serious "mess" (as Joe put it.)
Quote from @Nick Anderson:
Thanks for the input! All of that confirms what I was thinking, wanted to make sure I wasn't missing any (legal) loopholes before coughing up a bigger down payment.
I know of two options at 10% down and 15% down that could work for your situation. they sting a little less than the 25% down non-owner occupant requirement fannie and freddie have on their loans if you can find numbers that work for you.
The 10% "down vacation home" (second home mortgage) is an option. happy to make some introductions to lenders who have experience with it, as there are some specific requires regarding location and use that matter.
the 15% down nonowner occupant option is with a local lender and is allowed for 1-6 units. You've gotta hit the criteria I presume, but I've had @Sam German speak with a few of my clients about it. Just talk to him if it's interesting.
Anyway, happy to help if I can.
