Conventional loans for primary house

[Kenji Tominaga]

Hi,

I'm currently looking into Philly market and shopping around the financing options.

My scope is as follows;

     - I'm based in NYC, and moving into this Philly property might be a tough decision (I need to commute to NYC office)

     - This is my first investment property.

- Looking for SFH or Duplex around $200K

I spoke with a couple of loan officers and brokers, then some of them mentioned to use conventional loans for primary house to get 5% down payment.

Of course this is for a primary house, so a buyer "intends to move in" to the property.

I learned FHA loans are more strict and require to live for 12 month at least, then banks might come for inspections.

I would like to ask for your experiences around conventional loans for primary house.

     - How long did you live there if moved out

     - Is there any occasion that you intended to move in but you could not move in

     - Any inspections or request to provide with the proof of move-in

Thank you in advance for sharing your time, experiences and knowledge!

[Jason Wray]

Kenji,

First I would advise if you can afford 15% down buy it as an investment if you do not think you can occupy it for at least 6 months. The bank/lender will question why you are buying out of state if you work in NY. It's not a deal killer if there is a valid reason but it is a Red flag that the underwriter will require a LOE/ - letter or Explanation.

I mention 6 months because if you can occupy the home for 6 months you can refinance and transition the property into a full time investment rental if there is 15% equity. So to explain if you buy the home for 5-10% down and it has either walk in equity or you renovate and its value increases. You can refinance it in 6 months and transition it from primary home to intended use investment rental.

This will save you the headache of having to deal with an "Occupancy Fraud" claim by the bank. Although its not common a bank or PMI company can send out a "Door knocker" who's primary job is to verify primary home occupancy.