FHA loan & Investment Properties

Real Estate Deal Analysis & Advice
6yFollow

FHA loan & Investment Properties

Arthur Voskanyan
La Jolla, CA · Member since 2017 · 96 posts · 11 votes

Hello RealEstate Gurus,

I have a general question, and want to see if I'm just missing simple common sense. Why can't you use an FHA loan to purchase a property to then use that property as a rental/AirBnb? What are the consequences/restrictions and or lender measures to find out? How will they know that's what you are using for? I'm sure there is no Polygraph exam during the approval process 😂. Thank you in advance!

Arthur Voskanyan

0Reply
53 views

Most Popular Reply

Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y

@Arthur Voskanyan Arthur Voskanyan, the FHA program was setup to help lower income people achieve home ownership by helping them get loans that banks would otherwise not grant. Investors are excluded from using the program to purchase investment properties.

How will you get caught? 

The same way most criminals get caught, by not being very smart. Like for example, coming on a public forum and announcing plans to commit mortgage fraud. 

You are not only talking about mortgage fraud, but also tax fraud (hiding income), which involves the IRS. That is more serious.

For your own good, change your way of thinking before it lands you in serious trouble.

5Reply
See this reply in the discussion

23 Replies

Jump to latestLatest
  • Trevor Aydelott
    High Desert, CA · Member since 2019 · 319 posts · 161 votes
    6y

    My question to you @Arthur Voskanyan would be do you currently have a property you own? I'm thinking probably not as you're looking into an FHA loan ( now correct me if I'm wrong)

    Now lets answer your question. Do you plan on living in it initially? 

    Consequences are they can call the note due. ( Google that if you do not know what that is) 

    0Reply
  • Arthur Voskanyan
    OP
    La Jolla, CA · Member since 2017 · 96 posts · 11 votes
    6y

    @Trevor Aydelott

    I own only one property but it’s a joint title split, family business, but besides the point. I am aware if the consequences like “not due” yes, but in order for that to be initiated you have to trigger something in the lender/government program to see that you are using it as an investment property. So assuming you hide the rental income, which is easy through a business structure and a couple of payrolls/accounting work, but how will they know?

    Thank you,

    Arthur

    0Reply
  • Arthur Voskanyan
    OP
    La Jolla, CA · Member since 2017 · 96 posts · 11 votes
    6y

    @Trevor Aydelott

    Also, it doesn’t matter if I plan on living there or not, I can easily say yes, and not live there

    0Reply
  • Trevor Aydelott
    High Desert, CA · Member since 2019 · 319 posts · 161 votes
    6y

    No I know you can say you're going to live there and not live there. But it does matter for me to answer the question. I didn't want to just write a bunch of stuff if it doesn't relate to your question. 

    So people buy a home and live in it for four month and then go buy another one. 

    Hell I bought 3 VA loans, and two were right next door to each other. So I'm a master of getting what I want with loans.

    1Reply
  • Ika Sargeant
    Real Estate Agent · Reston, VA · Member since 2017 · 295 posts · 163 votes
    6y

    @Arthur Voskanyan FHA loans are intended to help people buying homes and who have difficulty raising the money for a down deposit. I am sure your lender would ask if this is your primary residence and you likely said yes. Many people get around this by staying for a year in that residence. If you rent it out after you buy it, Your actions would be illegal. I am sure some people find it exciting to cheat the system but if you are going to be a long term investor do you want this illegal activity associated with your business. Illegal and unethical behavior might be successful short term goal but it's never really worth it long term.

    2Reply
  • Luke G.
    Rental Property Investor · Hammond, WI · Member since 2017 · 139 posts · 217 votes
    6y

    @Arthur Voskanyan You're asking how to commit mortgage fraud, this isn't a good idea.  The consequences are not just calling a note due, you could be charged with a federal offense since it's a Fannie/Freddie backed product.  You're correct they may not find out, but why not just actually live in the property for a year and not have to worry about it?

    And you were intelligent enough to ask this question on an open public forum using what I'm assuming is your actual name.  Good luck. 

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y

    @Arthur Voskanyan Arthur Voskanyan, the FHA program was setup to help lower income people achieve home ownership by helping them get loans that banks would otherwise not grant. Investors are excluded from using the program to purchase investment properties.

    How will you get caught? 

    The same way most criminals get caught, by not being very smart. Like for example, coming on a public forum and announcing plans to commit mortgage fraud. 

    You are not only talking about mortgage fraud, but also tax fraud (hiding income), which involves the IRS. That is more serious.

    For your own good, change your way of thinking before it lands you in serious trouble.

    5Reply
  • Arthur Voskanyan
    OP
    La Jolla, CA · Member since 2017 · 96 posts · 11 votes
    6y

    @Ika Sargeant

    Appreciate it!

    0Reply
  • Arthur Voskanyan
    OP
    La Jolla, CA · Member since 2017 · 96 posts · 11 votes
    6y

    @Luke Grosskreutz

    I study law, don’t worry the intention is to seek knowledge here, not to commit fraud, that’s why it’s in the open 🙄😁

    0Reply
  • Arthur Voskanyan
    OP
    La Jolla, CA · Member since 2017 · 96 posts · 11 votes
    6y

    @Ika Sargeant

    If this is your residence for 1 year, after that year is up, then are you allowed to rent it out long or short term? Thanks

    0Reply
  • Luke G.
    Rental Property Investor · Hammond, WI · Member since 2017 · 139 posts · 217 votes
    6y
    Originally posted by @Arthur Voskanyan:

    @Trevor Aydelott

    Also, it doesn’t matter if I plan on living there or not, I can easily say yes, and not live there

    You can do whatever you want with it after you live in it for a year, with an FHA you can qualify for up to a quadplex. Live in it for a year and rent it out or do whatever you want, it doesn't matter and is completely legal.


    You say you study law and your intention is not to commit fraud, but this quote is pretty much the exact definition of mortgage fraud.  

    1Reply
  • Arthur Voskanyan
    OP
    La Jolla, CA · Member since 2017 · 96 posts · 11 votes
    6y

    @Luke Grosskreutz

    So, a cop is going to knock on my door and say, "Hey, young man, why did you write that about FHA loans on BiggerPockets?" You are under arrest!!!!!

    But I appreciate the tip, thank you.

    1Reply
  • Arthur Voskanyan
    OP
    La Jolla, CA · Member since 2017 · 96 posts · 11 votes
    6y

    @Luke Grosskreutz,

    Also, if I have the financial means, can I keep paying down the loan with extra monthly payments on top of the monthly payment set?

    0Reply
  • Luke G.
    Rental Property Investor · Hammond, WI · Member since 2017 · 139 posts · 217 votes
    6y

    @Arthur Voskanyan

    Absolutely- look up house hacking on these forums. Tons of excellent articles on it. Live in one unit. Rent the rest out, live for free basically (or cheaply).

    A cop isn’t going to knock on your door. But if you follow through with lying on a mortgage application it could come back to bite you in a big way. Its a heck of a lot easier to just be honest on it and live essentially rent free for a year and repeat the process.

    1Reply
  • Arthur Voskanyan
    OP
    La Jolla, CA · Member since 2017 · 96 posts · 11 votes
    6y

    @Luke Grosskreutz

    I live in a very competitive real estate market here in San Diego, hard to find deals period, whether rehabs, apartment complexes, really highly priced, but I appreciate it a lot Luke.

    0Reply
  • Twana RasoulBusiness Member
    Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    @Arthur Voskanyan Hi, with fha properties you have to intend on living in it for a year you are allowed to put as little as 3.5% down. You can decide to rent one of the rooms for long-term or short-term rental while you live there. If you are trying to increase your purchasing power, stay away from condos with HOA and sfr. Buy a duplex. Also, don't waste time on a 3-4 unit in San Diego, hard to make the loan work. I'd be happy to explain in further detail if you wanna send me a private message. I house hack a duplex myself.

    Compass5122 Reviews
    WebsiteView Page
    1Reply
  • Keith C.
    Lender · Central Florida Markets · Member since 2017 · 137 posts · 135 votes
    6y

    @Arthur Voskanyan You understand your signing a legal document ? Similar to when you open a credit card application ? Sign a car lease ? You know if they found out your using the car as a Taxi the lender can impound it ..

    @Arthur Voskanyan but I see your point as I always wonder why more People don’t speed if cops are not around ,

    Pretty much I don’t understand why anybody keeps any laws :)

    0Reply
  • Arthur Voskanyan
    OP
    La Jolla, CA · Member since 2017 · 96 posts · 11 votes
    6y

    @Keith C.

    I don’t want to get philosophical, I understand some people are perfect, who never lie, commit sin, break laws accidentally, including you, I appreciate your perfection to life, but again, I know what I’m signing. Thanks.

    0Reply
  • Fernando Antonio Rijo
    Lynn, MA · Member since 2016 · 9 posts · 3 votes
    6y

    @Trevor Aydelott

    How did you do this? Im trying to use my va multiple times as well (in the same city, not nect door lol)

    1Reply
  • Trevor Aydelott
    High Desert, CA · Member since 2019 · 319 posts · 161 votes
    6y

    Send me a message, I used Veterans United. I got a excellent lender. And I'm not just saying that. 

    0Reply
  • Bob ReinhardBusiness Member
    Lender · Patterson, NY · Member since 2017 · 488 posts · 186 votes
    6y

    @Arthur Voskanyan

    The only polygraph is your signature on the application attesting to the truth of its contents.

    [email protected]914-861-5501
    0Reply
  • Corey Damon smith III
    Member since 2020 · 2 posts · 1 vote
    6y

    @Trevor Aydelott lol that make sense

    1Reply
  • Trevor Aydelott
    High Desert, CA · Member since 2019 · 319 posts · 161 votes
    6y

    A lot of people talk a good talk, but can't back it up @Corey Damon smith III  

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free