FHA/203k loan must live in the house??

6 Replies

Could i actually buy a place with a FHA loan and just rent it on AirBnB? how do they know you live there or not? I have heard in some of the podcast that you must stay for at least a year.....

Yep, like all FHA loans it is owner occupant only, for a minimum of a year. Yes, they do randomly check.

I am in the process of buying house with an FHA loan. Current prospect has a detached studio apt connected to the garage. My plan is to meet the Loan requirements and live in the studio for the year or 2 that is required. Main house is a 3/2 that Id like to airbnb those rooms or rent it. Would I be violating the contracts or FHA loan and committing fraud by doing this? I ll be living there. My main concern is the insurance; my initial understanding is my regular home owners insurance wouldn't protect my self in the event of an incident. Then potentially raise a red flag.... Any words of wisdom would be greatly appreciated.

@Elliot Lamson  Yes, FHA loans require that you OO the property at least for 1 yr. You sign a document to that effect at loan closing. If you don't OO and the lender finds out, they will recall the loan. You will be lucky if it stops at that. What you would have committed is mortgage fraud, which is a federal offence. Just follow the law, live in the unit for 1 yr and then you are free to rent/AirBnB.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

Upen Patel, Lender in (#National Lender NMLS 1374243)
(571) 331-5161
@Alex Dawson  You can use a FHA loan to buy 1-4 unit residential property. If the property you are looking at is a true 2 unit (the main house and the studio) and is registered as such with the county, then you can live in the studio and rent out the main house. That is perfectly legal and will meet your FHA OO requirement.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

Upen Patel, Lender in (#National Lender NMLS 1374243)
(571) 331-5161

Thanks for the reply. Does anybody know or experienced any issues with going the AIRBNB route with FHA loan? The property is listed as a single family house. Not a true duplex. Detached apt with 1 meter for the utilities on the property.

Originally posted by @Upen Patel :
@Alex Dawson You can use a FHA loan to buy 1-4 unit residential property. If the property you are looking at is a true 2 unit (the main house and the studio) and is registered as such with the county, then you can live in the studio and rent out the main house. That is perfectly legal and will meet your FHA OO requirement.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

The FHA loan paperwork includes the "FHA Borrower's Contract with Respect to Hotel and Transient Use of Property", which forbids short-term rental of any part of the property (defined as less than 30-day rental period, OR including hotel-like amenities) during the life of the loan (not just the first year).  That effectively eliminates AirBNB as a legal option for anyone with an FHA loan.  That said, I have done a fairly thorough search of the Interwebs and have found no reference to anyone being penalized for this.  But it seems like it could be pretty easy for them to set up some sort of automated search of the AirBNB listings and match addresses to loans...

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