Hello BP family !
My husband and I are looking to get started with our first property in 2020. We are looking to buy either a duplex or 4-plex and live in 1 of the units. But my question is how long are we require to live in a property prior to renting it out ? Will this require us to change our loan once we move out? I am assuming the length of time required will vary based on the loan, but is this something I can ask when acquiring about the loan ? I am trying to avoid doing anything illegal or “shady” in starting this process. Any information is greatly appreciated!
Hi @Brooke Anglin .
Most loans have a one year occupancy requirement. You don't need to refinance out of the owner-occupant loan once you no longer live there - and by living in the property you can get a lower rate that comes with a lower down payment. It's a great way to use the system's rules to your advantage, and you aren't doing anything illegal - as long as you DO actually live in it for at least one year.
You can buy a 2-4 unit and live in one of the units and have the other units rented out right away, or even with tenants in the other units at the time that you buy. You will have to owner occupy the property for 1 year before you can move out of that unit and rent it out. But you can do that over and over again, and get your portfolio built, with the least amount down and all at owner occupied interest rates.
You will have to refinance off of a FHA loan to a conventional if you plan to use an FHA loan for your next purchase, as you can only have 1 FHA loan out at a time, unless the new FHA loan is 100 miles away or more from the previous FHA loan, in which case, you can have 2 out at one time.
I hope this helps?