Does 5% Conventional loan disqualify me from FHA 3.5%

[Omar Hassan]

In February I purchased a property using 5% conventional lending, once my one year of owner occupancy is over will I be able to qualify for an FHA loan since I've never used one previously?

Any information helps, Thanks!

[Chris Choe]

Quote from @Omar Hassan:

Quote from @Jaron Walling:

@Omar Hassan Depends on the lender but you'll be hard pressed to find one that qualifies you for an FHA. If your credit history, income, and finances are lined up I wouldn't take an FHA loan if you paid me. A conventional loan has more flexibly and gives the buyer (you) more ways to attack a deal.

If you're aiming to buy property #2 and rent out the first be ready to put down 25%. Lenders see it as an investment property which rules out low down payment loans. Using an FHA loan for an investment property is out of the question.

I understand that FHA puts me at a competitive disadvantage when purchasing but Id like to fully understand my options. Why would lenders see the property as an investment if I plan to occupy the home? I know I can not use FHA for a rental because of the year owner occupancy rule, but if that qualification is met is their any issue?

 @Omar Hassan, you're right. If you're occupying the property as your primary, it'll be fine. Note that the lending institution will conduct a spot check on the loan after it's well funded (i.e. months after) to confirm various data points from...were you employed at time of signing, primary occupancy through bills/statements and surprise showings to the property.

To your last comment, if you qualify for the loan, there's no issue. FHA cons are the upfront MIP which is 1.75% of the value and the monthly PMI. Beyond that, rates are always competitive, property must pass FHA appraisal inspection.