Owner Occupied FHA Loan looholes?

Question

Hello BP Community:

I'm looking to invest out of state since the market in my area is way too expensive for me to get started in and make it worth my while. That's why I am looking to invest back home in St. Louis Missouri, where I grew up. I am very familiar with the markets in St. Louis and know of a couple neighborhoods that I would like to ideally invest in.

My question has to do with the financing aspect of the deal.  I was curious as if it any loopholes exists where one can finance a property through an FHA loan and bypass the minimum 1 year owner occupied requirement of the loan? I believe that this would be extremely beneficial in allowing me to secure a property back home with little down, since I don't have enough for a 20% down payment and costs of rehab. In the meantime growing my professional career as an accountant here in San Diego.

I would love to hear back with any advice or experiences that you all may have

Also, I would love to connect with some of you in person as well. Any of my local San Diego investors would like to connect, let me know.

John Warren · Answer

@Sam Khoshnavaz the FHA low down payment loans are descend for owner occupants and there is no loophole that exists that will allow you to not live in the property. As an professional you have too much to risk to waste time on this strategy, and I would recommend planning for 20-25% down on all investment properties. Use your FHA closer to home where you can legitimately live in the property.

Michael Noto · Answer

@Sam Khoshnavaz You will sign to the fact that the home you are purchasing is your "primary residence". So if you are just planning on purchasing a run of the mill single family home the FHA loan will not work. You would be committing mortgage fraud if you purchased with a FHA loan and then turned around and rented it out the next day. The property has to be your "primary residence" for at least a year.

Kristen Beahm · Answer

Hey Sam! Welcome to St. Louis investing - I'd be happy to help if you don't have an agent just yet! My husband is also a local lender - would be happy to connect you with him if you'd like to message me. I'm not aware of any loopholes with FHA, but I know some 15% down options are available depending on the type of property.

Dan H. · Answer

There are other ways to buy non owner occupied with less than 20% invested.   Here are some to consider:  owner financed, Lease to own, private Financed, HML, BRRRR.   I am sure there are some I missed.

FHA is for owner occupied.  To purchase not intending to occupy is Liam fraud.

Good luck

Owner Occupied FHA Loan looholes?

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