Owner-Occupant Rules

Is anyone familiar with the owner-occupent rules pertaining to FHA loans? I found a Duplex which is currently rented (both units) through June. I have the financing to close on this property in 30 days using an FHA loan but I would rather not occupy the units until the lease is up if I am not breaking any rules.

You must plan on living in the property as your primary residence by the time of closing, FHA will lend on a 2-4 family property as long as it complies with all of the FHA guidelines. You will be able to use 75% of the rental income to help qualify for the payment.

I just closed on a 4 unit with FHA financing. You have to be living there within 60 days of the mortgage closing.


I won’t speak to FHA rules because I don’t deal w/ those, but if those units have a lease until June - you cannot kick either of those tenants out. You assume those leases when you purchase. You could try to convince one of them to leave if it’s a mutually agreeable thing or make it part of you offer that the unit be vacant upon transfer of ownership.

I found the answer according to http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4155.1/41551c1HSGH.pdf

Jfpen is right. You must occupy within 60 days. But does any one on the lenders behalf ever follow up to make sure the occupancy requirement is met? Do any of you know someone who has been caught breaking this rule? Could I possibly just set up some bills to be sent to the address so it looks like I am living there? Maybe chage the address on my drvers liscense.

Lying on your loan application for an FHA loan is a federal offense. No one on this site is going to give you permission to commit a felony.

If you can’t meet or don’t intend to meet the owner occupancy requirements for owner occupied financing, then apply for conventional non-owner occupied financing.

I dont want to steal your thread here but I am curious. How long do you have to live there? For the length of the note? Seems like more people are doing FHA loans. Is it a difficult process?

If you go to the HUD link that was provided earlier…it reads:

SECTION 1: OCCUPANCY STATUS 1-2 PRINCIPAL RESIDENCES. A principal residence is a property that will be occupied by the borrower for the majority of the calendar year. At least one borrower must occupy the property and sign the security instrument and the mortgage note for the property to be considered owner-occupied. [b]Our security instruments require a borrower to establish bona fide occupancy in the home as the borrower's principal residence within 60 days after signing the security instrument with continued occupancy for at least one year.[/b]