Articles Tagged With: FHA Occupancy Rules

November 17, 2023

FHA Loan Occupancy Guidelines You Should Know

Did you know that occupancy is a requirement when you buy a house with an FHA loan? FHA policy for occupancy requires at least one borrower obligated on the mortgage to take up residence in the home as the primary residence. This must happen within a “reasonable time” of loan closing, normally 60 days, unless you make other arrangements with the loan officer. FHA Loan Occupancy Rules For Single-Family Homes HUD 4000.1 is the FHA Single-Family Lender’s Handbook. In that handbook, you’ll find regulations covering occupancy as a condition of FHA loan approval. You won’t be approved for an FHA mortgage if you aren’t planning to use the home purchased with your loan as your primary address. How Will The FHA Know You Occcupy The Home? Loan officers are busy | more...

July 29, 2022

FHA Home Loans And Occupancy: What You Can And Cannot Do

By Joe Wallace

If you are buying an existing construction home with an FHA mortgage, or having one built for you using an FHA One-Time Close construction loan, you will notice some common requirements for these mortgages; one such requirement involves the borrower’s use of the property once the loan has closed. FHA new purchase mortgages, also known as forward mortgages, are intended for those who wish to occupy the home as their main address, or “primary residence”. Some borrowers may be confused by this requirement because they assume you can buy and rent out a home using an FHA mortgage without intending to occupy it. But the reality is that FHA mortgages actually require occupancy by at least one person obligated on the home loan, so how is it possible to purchase | more...

September 9, 2020

FHA Home Loans: The Occupancy Rules (And More) You Need To Know

By Joe Wallace

Can you use an FHA home loan to buy investment property you plan to rent out to others? This is a question many wonder about, and the answer is tied to the FHA loan occupancy requirements for these mortgages. FHA loan rules for all single-family home loans are described in the lender’s handbook, commonly known as HUD 4000.1. FHA loan rules include a variety of instructions for the lender that direct the financial institution on how to process and approve FHA home loans. But FHA loan rules don’t just apply to lenders and other mortgage professionals, some regulations are also written for the borrower. Did you know that FHA single-family mortgage loans are intended for owner-occupiers only? The rules listed in HUD 4000.1 are clear–the borrower must take possession of | more...

June 23, 2019

Can I Buy Investment Real Estate With An FHA Mortgage?

By Joe Wallace

This is a question on the minds of many and the issue definitely has some nuances. The FHA lender’s handbook HUD 4000.1 states “Investment Properties are not eligible for FHA insurance.” But what is the FHA definition of an investment property and how flexible are these guidelines? To understand what constitutes an investment property, we have to examine what the FHA considers as an acceptable purchase and what is considered an investment property. FHA mortgages are intended for owner-occupiers. At least one borrower obligated on the mortgage must live in the home as the principal residence. FHA loan rules require this to happen “within a reasonable time” after the loan closes and that time is often considered 60 days unless other arrangements are made. FHA loan rules do permit, if | more...

December 24, 2018

Winter Vacation Homes And FHA Loans: What You Need To Know

By Joe Wallace

Investing in a winter vacation home is tempting for many, especially in snow-bound states. Do borrowers have the option of purchasing a vacation home with an FHA mortgage? A look at FHA loan rules quickly reveals that one of the requirements for FHA loan approval is that the home be used as the primary residence; occupancy is a condition of loan approval for an FHA single family forward mortgage loan. But does this mean that borrowers can never use an FHA mortgage to buy a property that will become a winter vacation home? Not exactly. Borrowers who purchase a home with an FHA mortgage, use it as their primary residence, and refinance it with a conventional mortgage would be technically free (unless the conventional loan agreement states otherwise) to use | more...

October 8, 2018

Can I Buy A Rental Property With An FHA Mortgage?

By Joe Wallace

Can I buy a rental property with an FHA mortgage? This is a question borrowers ask when they are considering trying to use the property they buy with their new mortgage to earn income or even help pay the mortgage itself. Is this possible under FHA home loan rules? FHA Mortgage Loan Rules: You Must Occupy The Property You Purchase With An FHA Mortgage Most FHA single family home loans include an occupancy requirement, which means if you intend to rent a property you purchase with an FHA loan, it must be a single-unit or multi-unit home that you intend to occupy. FHA loans technically permit mortgages for properties with up to four living units. Your participating FHA lender may or may not offer home loans for multi-unit properties, so | more...

May 15, 2018

FHA Home Loans And Occupancy Requirements

By Bruce Reichstein

What are the occupancy requirements for FHA home loans? Like many government backed loans, there are general occupancy requirements a borrower must follow as a condition of loan approval. Whether you are buying an existing construction home or having one built for you using an FHA One Time Close construction loan, some guidelines for occupancy will apply. FHA Definition Of Occupancy, Principal Residences FHA loan occupancy rules basically require that the borrower live in the home full time, using it as the primary residence or principal residence instead of a vacation home, time share, or other intermittent occupancy arrangement. How does the FHA specifically define “principal residence”? According to HUD 4000.1: “A Principal Residence refers to a dwelling where the Borrower maintains or will maintain their permanent place of abode, | more...

February 1, 2018

Things You Should Know About FHA Home Loans

By Joe Wallace

There are many things you should know about FHA loans before you start the application process; myths and half-understood features of this home loan program still confuse some applicants going into the process. What follows should help you better understand the basics of the FHA home loan program. FHA Loans Are Not Just For First-Time Home Buyers There is no restriction on FHA loans for those who have purchased a home before. There are no separate terms, qualifications, or other rules for those who have purchased before. All FHA loan applicants who are financially qualified are welcome to apply. FHA Loans Are Available For Condos, Mobile Homes, and Mixed-Use Properties Suburban homes are just one of the types of property you can buy with an FHA mortgage. You can purchase | more...

November 21, 2017

What Are The FHA Loan Rules For Occupancy?

By Joe Wallace

What are the FHA loan rules for occupancy? This is a question many borrowers are curious about, especially those who are interested in becoming landlords and earning rental income from their property. Does the FHA single family home loan program allow a borrower to rent out the property purchased with an FHA mortgage? FHA Loans Are Specifically For Owner/Occupiers HUD 4000.1, the FHA loan handbook, states clearly that at least one person obligated on the FHA mortgage is required to use the property as their primary residence: “At least one Borrower must occupy the Property within 60 Days of signing the security instrument and intend to continue occupancy for at least one year.” Furthermore, the FHA clearly defines what it considers to be a “principal residence”. On page 140 of | more...

April 10, 2017

FHA Mortgage Occupancy Rules

By Bruce Reichstein

A reader asked us a question this weekend about FHA mortgage loan occupancy rules. “I purchased a home with an FHA loan and intended to live in it for 4 years until my fiancee got orders to relocate with the Air Force. Wellhe got orders to move from Colorado to Florida but I just purchased my house 3 months ago. Can I not leave Colorado and move with my fiancee?” HUD 4000.1, the FHA single-family home loan rule book, addresses situations like these, stating: “Borrowers who are military personnel, who cannot physically reside in a Property because they are on Active Duty, are still considered owner occupants and are eligible for maximum financing if a Family Member of the Borrower will occupy the subject Property as their Principal Residence, or | more...