Can I get an FHA loan on this triplex?

Question

Can I get an FHA loan with the 3.5% down on a triplex that's 20 minutes away from my home and mark that as my primary residence to get the loan while I live with my parents at my current home and work on the other units to get them rent ready?

Chris Mason · Answer

Unless you actually intend to move in and occupy it as your primary residence within 60 days, this would be mortgage fraud.

The definitive answers to the "what does 'intent' mean?" and "what does 'primary' residence mean?" type questions, ultimately, are whatever a judge in a court of law decides the answers are, if it were to get to that point. I'd suggest not playing with fire.

Jeffrey K. · Answer

The biggest thing here, in my experience, is the self sufficiency test. With FHA this states that 75% of the rents need to cover the entire PITI. I bought a fourplex with FHA, and this was the major hurdle.

As for the occupancy aspect, yes its mortgage fraud. Conversely, in my experience no one from the bank has ever come knocking on my door provided my payments are on time. However, one the the units must be vacant within 60 days of you buying the triplex so you can move in. The loan wont get pasted the underwriters without verification of this.

Chris Rand · Answer

If you got caught it could spell out trouble will your bank, not sure how serious the consequences would be though. I believe you have like 60 days to move in after buying with an FHA, which could be enough time to get it rent ready, however you could only rent out 2/3 units since on paper you would be living in the third. On a side note, If the property needs work, you could qualify for an FHA with a 203k wrap, which allows you to wrap the costs of the rehab into the FHA loan, as long as the rehab is done by FHA approved contractors.

Can I get an FHA loan on this triplex?

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