Using a UDSA 0% down loan for an intended Rental Property

[Nate Crowe]

I am currently in the process to purchase my first home as a primary residence with a 0% down USDA loan. The home is a foreclosure with a purchase price of 100k. My wife and I plan to live there and fix it up for a around a year. We will then move out and use it as a rental property. This will be our process over the next few years to try and ease into real estate. We will need to refinance the loan since USDA loans are only owner occupied. I am thinking we should be able to do a cash out refi once we get done fixing it up. We should be purchasing the home at a good price where we are buying equity already, but I am wondering what kind of issues could we run into if we did not refinance and rented out a home on a USDA loan? I've heard of the due on sale clause where they can make the note due, but I don't know much about it.