FHA Fourplex Financing - Never Occupied?

Question

Hey all, quick question!

Lenders and Agents, have you ever had a client who purchased a fourplex or multi-family property, that didn't owner occupy, for legitimate reasons, hypothetically, and have issues down the road?

Doing another purchase not quite 2 years later and the lender things it will be an issue during a manual underwriter to flag them. Any experience on this?

Tags: FHA, multi-family, owner occupied FHA, fourplex, duplex

Account Closed · Answer

@James Cash your scenario isn't unique to just fourplexes, rather, it's all FHA Home Loans for owner occupants. When you close, you sign an FHA Home Loan Occupancy Affidavit (not the exact name, however) where you acknowledge that you must be in the home within 60 days and live in that property for a minimum of one year, full time. It likely boils down to the intent at closing. If you sign this with no intent of living there, then you expose yourself to Fraud.

Below is a historical thread that delves deeper into this concept:

https://www.biggerpockets.com/forums/49/topics/114510-fha-owner-occupancy-requirements---less-than-one-year

Theo Hicks · Answer

Hi James,

I am confused on what issue you are referring to? Is your client wanting to acquire a house with an FHA loan and not occupy the building?

James Cash · Answer

@Theo Hicks I understand the terms of the loan, but I am wondering if anyone has first had experience with this issue.

Thanks!

Theo Hicks · Answer

Are you asking if you can acquire a property with an FHA loan and not occupy the property? Or are you asking if people purchase 4plexes as investments rather than owner-occupied.

If the latter, all the time. If the former, you are in violation of the loan terms.