STR with a 2nd Home Loan. Mortgage Fraud?

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STR with a 2nd Home Loan. Mortgage Fraud?

Rob HiltonPro Member
Member since 2021 · 26 posts · 6 votes

Hey BP Family, 

Has anyone had issues listing their property as a STR when the loan was originated as a 2nd Home Loan? For those who have done so, have there been accusations of mortgage fraud? Thanks in advance.

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Luis Olivier
Real Estate Agent · Member since 2022 · 37 posts · 34 votes
4y

Definitely speak to a lender. However, my wife and I have used this loan for a STR that we still operate to this day. The lender knew our intentions, it is not mortgage fraud. If you satisfy the requirements (usually has to be 50+ miles away from your primary residence and you have to stay there at least 14 days out of the year) then you can do STR. The downside is you can not put it in an LLC if you wanted to do that because it is not an investment property, it is your second home. Talk to multiple lenders.

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  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    4y

    ….

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
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  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    4y

    Not for me. You should speak with some lenders who offer these types of loans

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  • Luis Olivier
    Real Estate Agent · Member since 2022 · 37 posts · 34 votes
    4y

    Definitely speak to a lender. However, my wife and I have used this loan for a STR that we still operate to this day. The lender knew our intentions, it is not mortgage fraud. If you satisfy the requirements (usually has to be 50+ miles away from your primary residence and you have to stay there at least 14 days out of the year) then you can do STR. The downside is you can not put it in an LLC if you wanted to do that because it is not an investment property, it is your second home. Talk to multiple lenders.

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y
    Quote from @Luis Olivier:

    Definitely speak to a lender. However, my wife and I have used this loan for a STR that we still operate to this day. The lender knew our intentions, it is not mortgage fraud. If you satisfy the requirements (usually has to be 50+ miles away from your primary residence and you have to stay there at least 14 days out of the year) then you can do STR. The downside is you can not put it in an LLC if you wanted to do that because it is not an investment property, it is your second home. Talk to multiple lenders.


     I agree with Luis. One of the key items as he mentioned is using the property a minimum of 14 days as it is your 2nd home.

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  • William Sanders
    Member since 2021 · 3 posts · 0 votes
    4y

    how in the world would anyone know if you stayed in the property for 14 days?

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  • Anthony R.
    Member since 2022 · 53 posts · 24 votes
    4y

    Not an issue, not mortgage fraud as long as you abide by the above rules. Also, technically it is a 10% rule--you have to stay there a minimum of 14 days a year OR 10% of the total number of days rented. So, if you rent for 180 days a year, that 14 goes up to 18 days.

    Talk to a tax expert or do a little spade work. There's lots of info out about the differences between a vacation home and investment home, from both lender and IRS perspectives.

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  • Kevin Luttrell
    Lender · Orange County, CA · Member since 2019 · 299 posts · 255 votes
    4y

    2nd home loans are permitted for STRs. Must meet the following requirements:

    https://selling-guide.fanniema...

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