Can someone tell me what the implications would be if I decided to purchase a multi family propert using a 203k loan on a short sale but then while the construction was being done changed my mind not to owner occupy but use as a rental instead?
Everything I have read on the 203k does clearly state that the property must be indended for owner occupied but does that mean the owner must live there for some period of time, just intend to use,must move in right away?
Any help on this subject would be greatly appreciated I cannot find anything on the web about this scenario.
Obviously there are rules and guidelines or everyone would be doing it. It’s just like any other owner occupied loan. You are required to owner occupy the home for 1 year.
An FHA loan requires a borrower to establish occupancy in a home as their principal residence within 60 days of signing the security instrument and requires continued occupancy for at least one year.
After that you may do as you wish.
BORROWER ELIGIBILITY
Can an investor use the 203(k) program?
No. In October, 1996, the Department placed a moratorium on investor participation in the 203(k) Rehabilitation Mortgage Program.
Can a local government agency or a nonprofit organization use the 203(k) program?
Yes. The same qualification requirements will be used as for an owner-occupant of the property.
What is the definition of a First-Time Homebuyer?
A single person or an individual and his or her spouse who have not owned a home (as a tenant in common or as a joint tenant by the entirety) during the three years immediately preceding the date of application for the 203(k) loan. Any individual who is legally separated or divorced cannot be excluded from consideration, because the three-year waiting period does not apply, provided the individual no longer has an interest in the home.
http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm
http://www.hud.gov/offices/hsg/sfh/203k/faqs203k.cfm