Owner Occupied Loans

[Patrick Fermo]

Hello Bigger Pockets World:

I just read something I thought was interesting, and was hoping the brilliant minds on this website could help me sort it out. The following excerpt is from an article describing the rules surrounding qualifying for an FHA loan for a duplex, which as of now is my strategy to enter the REI world:

"After a year of living in the home, you can legally move out and rent the property. There are no laws against doing this. However, unless you own 30% of the property at the time you rent it out, you will not be able to get another loan until you have two years of landlord experience with that home on your taxes. Going this route means you will have to wait 3 years to buy the second property. Most new investors don’t know this going in and find out too late."

So even after that first year of living in the property, and then moving out, I absolutely can not qualify for any other kind of loan for an additional two years? Or does the article mean another FHA loan? I'm confused as to whether this spans across all kinds of financing, conventional loans, portfolio loans, HELOC etc....

Any help or clarification on this would be awesome! Thanks in advance everyone!

[Chris Mason]

I'd say that snippit works out to be true about 80% of the time. The other 20% is a grab bag of people that don't need to use ALL rental income to qualify (so the one unit appearing on tax returns does the trick), people that move back in with mom who doesn't charge rent, wonky things like that. 

The person who wrote that is probably generalizing from their anecdote, probably when they applied for a Fannie loan, they probably didn't have super strong day-job income relative to how much mortgage they wanted. Each of these loan types has their own 1000 pages of guidelines, so the way to go about finding your answer for your particular situation is to find a REI-friendly local lender and drill down with them.

I know someone that had a medical condition, call it "whateveritis." It started with some lower back pain. Now whenever someone says "man my back is sore" her immediate response is "oh it's probably whateveritis!" She is in no way qualified to suggest that, there are LOTS of times where someone's back hurts and it's some other reason or condition or nothing at all. That's what happens with internet mortgage advice. One person has one experience with one guideline in one scenario, and then whenever someone else wants to know about anything remotely similar, they generalize their own experience. "Oh you have mortgage whateveritis."