Owner Occupied question

[Casey Martin]

Hi, I am looking at ways to acquire rental property. I have a current home which I have lived in for 2 years with an FHA loan. I am wondering if I could move to a different home in the same area and acquire a “normal” mortgage for 5% down or so, live in it for a couple of years then do the same thing one more time.... ending with 2 rental properties and a home for myself. Would this be a way to avoid putting 20% down on an investment property? Are there any downsides to this if it can be done? Thank you for your help!

[Wayne Brooks]

Yep, no restrictions on that.

[Melvin List]

@Casey Martin If you plan on occupying the property then 5% down is an option.  

[Jack P.]

Look more into the requirements of a FHA loan. If you already own the home you live in, then you can only use a FHA loan for a new property if you:

1. are moving because of a work-related transfer

2. an increase in family size requires a larger home

direct quote:

"FHA will not insure more than one Property as a Principal Residence for any Borrower, except as noted below. FHA will not insure a Mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining Investment Properties, even if the Property to be insured will be the only one owned using FHA mortgage insurance."

What are the exceptions for the “single property” rule?

Relocations

According to HUD 4000.1, "A Borrower may be eligible to obtain another FHA-insured Mortgage without being required to sell an existing Property covered by an FHA-insured Mortgage if the Borrower is...relocating or has relocated for an employment-related reason; and establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower's current Principal Residence. If the Borrower moves back to the original area, the Borrower is not required to live in the original house and may obtain a new FHA-insured Mortgage on a new Principal Residence, provided the relocation meets the two requirements above."

Increase In Family Size

An exception may be approved include increases in family size, or a borrower who is vacating a jointly owned property. In all circumstances that qualify, the application for the new FHA loan is processed on a case-by-case basis, so a borrower will need to work with his or her participating FHA lender to see what is possible. There’s nothing wrong with running your circumstances past a loan officer to see what that financial institution might be willing to do.