Owner Occupied every year?

5 Replies

Hello PB,

I just bought a duplex with a 5% conventional Owner-occupied loan (home possible program)  and I plan to stay in it for the one-year requirement.

If my DTI allows, Can I get another OO loan next year for another property and move in this new house for another year? is this acceptable or frown upon or illegal? and if it is acceptable how many times can I do this?

Originally posted by @Bishoy Takla :

Hello PB,

I just bought a duplex with a 5% conventional Owner-occupied loan (home possible program)  and I plan to stay in it for the one-year requirement.

If my DTI allows, Can I get another OO loan next year for another property and move in this new house for another year? is this acceptable or frown upon or illegal? and if it is acceptable how many times can I do this?

I personally have used owner occupied mortgages to purchase 3 properties, two of which are currently rentals. The first one was FHA and I lived in it for nearly a year. The second one was conventional with 5% down and I lived there for two years. The third I have lived in just over a year and plan on turning it into a rental next year.

This is acceptable from what I have seen, which is why I keep doing it.

Not illegal and definitely possible. however, some underwriters may question motives if they see you doing it frequently or are not making meaningful changes. If it does not pass their sniff test, they can hold up the process for fear you are lying about something. For example, if you leave a 3 bedroom and move to a 2 bedroom or move farther from work, they may question your motives.

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I've done this twice.  As @Andrew B. stated, the third time I tried to do this with an FHA loan got held up because they didn't believe I'd actually move. I used the same lender and was told that it was the reason for the hold up. Generally though, this is a reasonable strategy. Just be up front with your lender.

Perfectly legal and definitely within what the loan agreement requires.

The ability to get a future loan will depend on the debt service and the income from your 'portfolio' and your personal, day job, income.

@Bishoy Takla as mentioned above it is possible to do this.  However, this is the most common area of mortgage fraud in the industry.  That's why some lenders are very leary of this type of lending.  So make sure that you have good reasons to explain to the lender. Unfortunately, just moving to acquire another property isn't justifiable to some lenders....so your reason can be ANYTHING but that.  I've even had people say "we like the shade of that street" as justification of moving.  It's a little strange but some of these "government" types of loans just want to check a box...and not really make sense of it all.  Anyway, hope this helps in some way.