FHA loan question about owner occupancy

[NetWareHead]

Anyone take an FHA loan to purchase a property? The catch is that the owner needs to occupy the property as his residence to qualify for the rates/conditions. My question is how long does the owner need to live there to fulfill the conditions of the loan?

Can a buyer purchase the property and then after a year move out? 1 year so far is the only time period I have found while googling around.

 

[Greenman]

I was told two years, but that was a long time ago.

 

[UglyCasanova]

Should be 1 year.

 

[fstime]

There can also be other funny restrictions if it is a Fannie Mae foreclosure like you can't even sell the property in a certain window unless the profit margin is below a specific percentage.

Basically, they are really pushing for long term, owner occupied buyers and giving their offers preference over anything else.

 

[TerryMathews]

Anyone take an FHA loan to purchase a property? The catch is that the owner needs to occupy the property as his residence to qualify for the rates/conditions. My question is how long does the owner need to live there to fulfill the conditions of the loan?

Can a buyer purchase the property and then after a year move out? 1 year so far is the only time period I have found while googling around.

These T&Cs may vary by geographic area. OP, you need to consult with your lender.

 

[weadjust]

I got a first time home buyers grant and the house is financed with FHA loan. The $3,500 grant docs said I had to pay back a pro-rated amount if I didn't live in the home for seven years. After one year I moved out and started renting in out. That was 20 years ago and I still on the rental property. No one from the state housing program (grant) or FHA ever asked or checked occupancy. I made every payment on time so I doubt FHA/Lien Holder cared as long as they were getting paid.

 

[UglyCasanova]

I got a first time home buyers grant and the house is financed with FHA loan. The $3,500 grant docs said I had to pay back a pro-rated amount if I didn't live in the home for seven years. After one year I moved out and started renting in out. That was 20 years ago and I still on the rental property. No one from the state housing program (grant) or FHA ever asked or checked occupancy. I made every payment on time so I doubt FHA/Lien Holder cared as long as they were getting paid.

They would certainly care if they knew. What you did is called "mortgage fraud".

 

[Paladin3]

They would certainly care if they knew. What you did is called "mortgage fraud".

And in other circles it's just called good business. Analyze potential risk vs potential reward and act accordingly. Morality just gets in the way.

 

[UglyCasanova]

And in other circles it's just called good business. Analyze potential risk vs potential reward and act accordingly. Morality just gets in the way.

Meh, his call on the risk. I doubt they would go after him over occupancy fraud given that it was one house, but it is a federal crime nonetheless and given that he used a grant to get into the house if it ever turned up in an audit (which they do all of the time) he very well may be liable to return the money and face a penalty.

 

[boomhower]

FHA is supposed to be changing the terms and requiring PMI for the duration of the loan. That takes away a lot of the desirability.

 

[NetWareHead]

I got a first time home buyers grant and the house is financed with FHA loan. The $3,500 grant docs said I had to pay back a pro-rated amount if I didn't live in the home for seven years. After one year I moved out and started renting in out. That was 20 years ago and I still on the rental property. No one from the state housing program (grant) or FHA ever asked or checked occupancy. I made every payment on time so I doubt FHA/Lien Holder cared as long as they were getting paid.

This is a question I would like answered. How long does one need to occupy the property before one can begin renting it? If I do begin renting it while it is still under an FHA loan, do I have to refinance the house to "get rid" of the FHA loan or can renting the property still occur?

There are life changing events that enable a borrower to move out of a FHA mortgaged house and that includes marriage or birth/adoption of a child. For instance, you live in this house financed by an FHA loan and you get married. You could move out of the house and live somewhere else if you want to argue the home's size no longer fits your living arrangement. But y ou can only have one FHA loan at once these days and need to pay off/refi the FHA loan if you want to purchase another home under the FHA program.

 

[NetWareHead]

FHA is supposed to be changing the terms and requiring PMI for the duration of the loan. That takes away a lot of the desirability.

Yes, I beleive you could get rid of PMI in the past once your equity climbed above 20%. Nowadays you need to keep PMI for the duration of the loan.

 

[UglyCasanova]

HUD 4155.1 4.B.2.b FHA Requirement for Establishing Owner Occupancy

At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied.

FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.

 

[Vdubchaos]

They would certainly care if they knew. What you did is called "mortgage fraud".

Yep, and don't look up how much time you can get for it.....

 

[boomhower]

Yes, I beleive you could get rid of PMI in the past once your equity climbed above 20%. Nowadays you need to keep PMI for the duration of the loan.

Signed my loan last year and it's minimum of 5 years and 20% equity.

 

[OILFIELDTRASH]

Signed my loan last year and it's minimum of 5 years and 20% equity.

I think if you were to get one today the pmi is for the life of the loan.

 

[UglyCasanova]

Yep, and don't look up how much time you can get for it.....

Probably nothing.

If the lender or holder discovers this, by law they are required to file a SAR on you with the FBI. What they do from there is up to them, and mainly they are tracking fraud rings rather than some guy deciding to rent out his supposedly owner occupied property. That said, people do go to jail all of the time for mortgage fraud, but it is mainly the bigger fish that get fried.

 

[NetWareHead]

Signed my loan last year and it's minimum of 5 years and 20% equity.

Just checked last week and its no longer that. It is for duration of the loan now

 

[z1ggy]

Can somebody post the laws/rules for FHA loans in CT? I took one out for my house and I think I got a special one because my downpayment was 0%, but in return I pay a higher interest rate on the loan. I remember them telling me I couldn't sell the house for x years (I think it was 2-3) but I don't remember any rules about renting it out...

 

[NetWareHead]

but I don't remember any rules about renting it out...

I'm still looking for the answer to this as well. I need to occupy it for a year at least but what are the conditions of renting a home out that was financed by FHA loan?

 

[WackyDan]

This is a question I would like answered. How long does one need to occupy the property before one can begin renting it? If I do begin renting it while it is still under an FHA loan, do I have to refinance the house to "get rid" of the FHA loan or can renting the property still occur?

There are life changing events that enable a borrower to move out of a FHA mortgaged house and that includes marriage or birth/adoption of a child. For instance, you live in this house financed by an FHA loan and you get married. You could move out of the house and live somewhere else if you want to argue the home's size no longer fits your living arrangement. But y ou can only have one FHA loan at once these days and need to pay off/refi the FHA loan if you want to purchase another home under the FHA program.

FHA loan does not anchor you into occupying the house for the full term of the mortgage. There may be a 1-2 year requirement so you should check on that.

Nobody cared to check as to whether or not we were living in or renting out the house we bought with an FHA loan.

 

[UglyCasanova]

I'm still looking for the answer to this as well. I need to occupy it for a year at least but what are the conditions of renting a home out that was financed by FHA loan?

HUD requirements for investment properties.

 

[z1ggy]

HUD requirements for investment properties.

^ Doesn't say anywhere in there how long you need to be the primary resident for a property before you can rent it. It just lists requirements and exceptions when taking an FHA loan.

 

[UglyCasanova]

^ Doesn't say anywhere in there how long you need to be the primary resident for a property before you can rent it. It just lists requirements and exceptions when taking an FHA loan.

See 4155.1 4.B.2.b, the part I quoted above. The requirement is to live in your house within 60 days of closing and then continuously for at least one year. After that, you are free to rent.

 

[weadjust]

They would certainly care if they knew. What you did is called "mortgage fraud".

If it was mortgage fraud then I did less fraud than the banking industry did to this country's home owners. We owe them some more fraud. Fuck them greedy bastards.