Articles in Category: FHA Loan Basics

February 19, 2016

FHA Loan Questions: Occupancy Rules

We get many questions in the comments section about various aspects of FHA loan rules, including the nuances of the FHA loan occupancy requirements. Here’s one of the latest: “I have a married couple that wants to purchase FHA the Husband is a stay at home Father the wife is the sole bread earner. The home they want to purchase is 3 hours from her employment. But the Husband and Son will be home all during the week and she will come home on weekends. Can that loan be approved? If so I need to show the underwriter because they want to deny the loan.” In general FHA loans are intended for principal residences. FHA loan rules define a principal residence as, “…a dwelling where the Borrower maintains or will | more...

October 1, 2015

FHA Loan Reader Questions: Occupancy

By Bruce Reichstein

One common question many potential borrowers have about FHA mortgage loans has to do with the FHA’s occupancy requirement. One reader asked us recently, “What is the definition of Occupancy defined by FHA? Does using the space as an office suffice?” FHA single family home loans are only for residential purposes. Borrowers are permitted to use a portion of the property they buy with an FHA loan for business purposes, but the non-residential use of the property cannot exceed 25% of the total floor space of the home. FHA loan occupancy requirements state that the borrower must intend to use the home as the primary residence for at least one year. That means the borrower must move in and take possession of the property within a reasonable amount of | more...

September 23, 2015

HUD 4000.1 Questions: Occupancy

By Bruce Reichstein

With the publication of the new FHA Single Family Home Loan guidebook, HUD 4000.1, there have been some changes, updates, revisions and restatements of existing FHA loan policy. We’re examining the new rule book over time to discover what borrowers and lenders alike may need to know about FHA home loans under the new handbook. Occupancy is an important question/issue connected with FHA home loans. HUD 4000.1 states that there is a definite occupancy requirement for new purchase single-family home loans: “At least one borrower must occupy the property as their principal residence within 60 Days of signing the security instrument and intend to continue occupancy for at least one year.” There is also a requirement on non-occupying co-borrowers–they don’t have to live in the home but must meet the | more...

June 26, 2015

FHA Loan Occupancy Rules

By Bruce Reichstein

Some borrowers get in touch with us with questions about FHA loan occupancy rules. One of the most common questions about FHA loan occupancy requirements involves those who must travel for business, or who find themselves having to relocate to another state because of job issues. Are borrowers who spend less time at home than a typical home owner considered in violation of FHA mortgage loan occupancy rules? For example, the homeowner who now works and lives in another state but commutes home for the weekend? FHA loan rules require a borrower to take ownership of the home at closing time and use the home as the primary residence for at least one year after the closing date. The borrower can’t vacate the home and rent it out during this | more...

June 2, 2015

FHA Occupancy Requirements

By Bruce Reichstein

One common type of question we are often asked about FHA loan occupancy rules involves situations where the borrower wants to purchase the home for his or her primary residence, but may be gone for extended periods of time because of job-related travel. Some borrowers want to know if the FHA loan rules on occupancy specify a number of calendar days per year of occupancy, or if a spouse and children can fulfill the borrower’s occupancy requirement in his/her absence. FHA loan rules found in HUD 4155.1 Chapter Four Section B simply states, “A principal residence is a property that will be occupied by the borrower for the majority of the calendar year.” It may be at the lender’s discretion to determine what the minimum occupancy for the borrower might | more...

What happens to my FHA loan in a natural disaster?

May 16, 2015

FHA Loan Occupancy Rules: A Reader Question

By Bruce Reichstein

A reader asks, “Is there a time requirement of the purchaser for moving into a recently purchased home with an FHA loan? Also, can the purchaser have family members move into the recently purchased home (FHA loan) instead of the purchaser?” In general, FHA loan rules require the borrower to the an owner-occupier. FHA single family home loans are for principal residences only, so the borrower must certify that he or she is buying a home for personal use. Additionally there is an occupancy requirement–FHA loan rules state the borrower must move into the home and use it as the primary residence within two months of the loan closing date. This information is found in HUD 4155.1, Chapter Four Section B, titled, “Eligibility Requirements for Principal Residences”. It begins by | more...