Husband and wife use VA and FHA

Landlord · Jonesboro, GA · Member since 2015 · 65 posts · 17 votes

I know the basics of VA and FHA but you don't see this kind of situation too often. So I bought my primary home with VA under my name only more than a year ago. My husband does not have a mortgage and is not on the title. We now want to buy a property using FHA under his name only. Is this possible to do? Can we 'say' that we're moving or that he is moving out by himself? It is possible that he moves in to the new house to do fix and flip if we buy a fixer-upper. So technically he will move in to it. We don't want to get in trouble and go to jail but we are trying to do creative financing and FHA with a multifamily seems like the smartest thing we can do next. Has anyone done this with husband and wife own 2 VA, 2 FHA, or VA and FHA? Any thoughts?

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Leland Barrow
Investor · San Marcos, TX · Member since 2015 · 272 posts · 360 votes
10y
That is mortgage fraud and you posted it on a publicly searchable forum. No it is illegal and it is easy to follow with insurance. If your property burns down and the insurance company finds out it was all a lie then you will have multiple issues. Fraud is fraud.
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Kelli Huang
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Landlord · Jonesboro, GA · Member since 2015 · 65 posts · 17 votes
10y
Thank you for clearing it for me. I just never had a clear answer on this. I guess I better find another way to be creative.
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Mitchell Sullivan
Real Estate Investor · Charlotte, NC · Member since 2016 · 8 posts · 0 votes
10y
It's not Mortgage Fraud, but it is a "grey area". Technically, there is nothing illegal about purchasing a home in your name and later renting it out, or selling it. There is also nothing illegal about obtaining a homeowners insurance policy for a primary residence and later changing it to a landlords.
The keyword to all of this is "later". As long as you're not currently renting the house out, and calling it your Primary.. you're not making a fraudulent statement. And if he truly did move into the property, it would be "owner occupied" for a little while.
As long as you keep the Insurance Policy current (with the right occupancy status) and he actually inhabits the property for the first three months, I wouldn't worry about anything. I wouldn't purchase a house as a primary, and than sell it two months later. He should technically, actually live in it, if only briefly.
All I'll leave this at.. is keep that homeowners insurance policy updated, and current.
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Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
10y
This isn't a "grey area," this one is pretty black and white. If your FHA loan states it must be owner occupied for 12 months, that means that is must be owner occupied for 12 months. You may rent it out after that, and you can go into it with that intention, as long as you owner occupy it for 12 months.
Yes, there are ways out of the owner occupant status, such as if you get a new job that transfers you more than 50 or 100 miles away (I can't remember which one).
What is to prevent you from actually living in the home during the 12 month owner occupant period? You could just rent out your own current VA-loan property.
'Saying' you plan to owner-occupy, but not actually doing so is mortgage fraud, even if you aren't renting it to anyone.
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Kelli Huang
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Landlord · Jonesboro, GA · Member since 2015 · 65 posts · 17 votes
10y
Thank you Mitchell and Mindy (I love your podcast by the way). I have occupied both of my FHA and VA for 12 months already.
There will be no problem for me to move into the new property. I am more worried about muy existing VA loan. I remember when I was buying the VA home after living in the FHA home for over 3 years, the bank asked me to write a statement of why I was moving. I did have a good reason (bigger house for my family in another city). But it was well over 1 year since I lived there and they still wanted me to provide a valid reason for moving.
Now I am looking at a multifamily very close to my home. I hope the bank will not give me trouble for moving into a small multi from a 4,000 sq ft home.
I also learned something very helpful today from googling :
A VA borrower is permitted to apply for an Interest Rate Reduction Refinancing Loan or IRRRL, which does not have the same occupancy requirements than a new purchase VA home loan.
According to the VA's official site, "The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL, you need only certify that you previously occupied it."
The rules for a VA IRRRL allow what the VA calls a "no money out of pocket" transaction, "by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs."
VA rules do require the interest rate on the new loan to be lower than the original rate, but there is an exception for those who wish to refinance an adjustable rate mortgage to a fixed rate mortgage.
It sounds like a win win situation. With IRRRL you get a lower interest rate and you don't need to occupy in it.
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Lucas Velasquez
DB/Technical Architect · Vacaville, CA · Member since 2016 · 4 posts · 0 votes
10y
I wouldn't do it and jeopardize losing all VA benefits if you get caught.
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