FHA Loan on a fully occupied duplex

[Kyle Nelson]

Hello everyone,

There is a duplex available in my area with both units currently rented out. My intent is to house hack this property. One of the tenants is on a month to month lease and the other is on a year lease ending in 6 months. My question is, is there anyway I can structure the deal with FHA financing if the month to month tenant is provided a notice to vacate 30 days after the close? From my understanding I would need to occupy the home within 60 days of close. So what happens if the tenant is difficult and refuses to move out and I am forced to evict them? Any help on this issue would be appreciated.

[Bryan O.]

Hi @Kyle Nelson. Your lender should be okay since they are on a month-to-month lease. If the tenant must be evicted you should also be covered, just keep documentation. Here is a section from my FHA loan (emphasis added):

"Borrower shall occupy, establish, and use the Property as Borrower's principal residence within sixty days after the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Property) and shall continue to occupy the Property as Borrower's principal residence for at least one year after the date of occupancy, unless Lender determines that requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are beyond Borrower's control. Borrower shall notify Lender of any extenuating circumstances."

Following the standard non-renewal of a lease is normal. Having to evict because someone decided to breach the agreement is beyond your control. Just make sure to ask your lender what their thoughts are in that circumstance.