Hey all. Just curious, could someone purchase, say a triplex, using a FHA loan, rent out two of the three units, retaining the third unit for yourself, but not actually live in it? Is that acceptable from the FHA perspective or do they want you to actually physically live in one of the units for the year?
Hey all. Just curious, could someone purchase, say a triplex, using a FHA loan, rent out two of the three units, retaining the third unit for yourself, but not actually live in it? Is that acceptable from the FHA perspective or do they want you to actually physically live in one of the units for the year?
Yes. they do expect you to live in the house. As per the agreement.
@Ken M. Thanks, Ken! I haven't dug into the actual agreement, but was curious because I'm not in a position to house hack, but see many people on here recommend the strategy. Wondered if you used the unit for storage or something like that, if it would qualify. Looks like the answer is no. Thanks for the info!
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
1y
You’ll sign a piece of paper at closing saying you plan to live there ], usually within 30-60 days. That’s why you get a discounted interest rate and a lower downpayment, because owne occupant properties are low risk.
Can you either rent out your current property if there’s been little/no appreciation, or sell it tax free? (Which you could also then do with your new purchase in 2 years. At least for the 1/2 or 1/3rd you lived in.) The tax savings could be larger than the regular income.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
1y
Yes, it needs to be your primary residence and you can only have one primary residence (where you live the majority of the time, get your mail, pay taxes, sleep at night, etc.). At closing you will sign a document that says this will be your primary residence, that you will move in within 60 days and live there for at least the next year. To sign that with the intention of living elsewhere during that year constitutes mortgage fraud. However my understanding is that exceptions can be made if unexpected life events happen such as job relocation, eminent domain, marriage, divorce, changes to family size, deployment, imprisonment, bankruptcy etc.
Real Estate Agent · Denver · Member since 2020 · 366 posts · 151 votes
1y
@Ben Callahan, you could find a partner who is looking to buy a similar property, be a co-signer to your partner, and have that person live in it and be a primary resident.
@Ben Callahan, you could find a partner who is looking to buy a similar property, be a co-signer to your partner, and have that person live in it and be a primary resident.
Rentals don't count. It has to be someone on the loan.
They expect you to live in one unit, BUT I have never heard of anyone from the lender go and check in on you to see if you are actually living there.
I have. It's called an "occ knock". I spoke with a mortgage "quality auditor" recently who said he knocked on 600 doors last month. There are about 65,000 investigations into this type of mortgage fraud per year, resulting in about 5,000 convictions with the average prison sentence being 18 months. It is a felony.
Plus the mortgage company probably calls the loan, and if you can't pay it off then you can lose the property. And your credit will be ruined for like 7 years. It may be a small chance of getting caught, but still a chance which makes it not worth it, in my opinion.
The insurance side of it is tricky too because you have to also lie on your insurance paperwork. If you have a landlord policy, that's an easy way to get flagged by your lender. But if you have an owner-occupied policy while not actually living there, then you don't have the right insurance and may not be covered. In a worst case scenario like the house burns down or a tenant sues you and you're not insured properly, that's a big risk.
So there's a few ways you can get wiped out if things go south.