FHA Loan Requirements For non-occupied owner

[Broc Wilson]

Hi BP,

I have some questions concerning FHA financing. My intent was to purchase a duplex or triplex using an FHA loan, live in it for the required time, then move into the next investment property (using conventional financing) and rent the first property out (without refinancing). From everything I've heard, you are able to move out after a year of occupying it, and then rent the home out. However, I wasn't sure if the property needed to be refinanced and converted from primary residence to an investment property when I do move out after a year. Do you have to refinance to a different loan when converting from residential to investment? Do some/all lenders require that you refinance the loan if you plan on moving out (becoming non-occupant) and rent it? Are you able to keep the original owner-occupied financing when you move and rent it out?

My lender is telling me that there are no FHA guidelines about living there for a year (there is no time period listed in the guidelines). The lender stated that the FHA "guidelines read that the loan has to be owner occupied" and that acceptable reasons to move out are a job change or if household size gets too large for home. Otherwise, he said I would need to sell or refinance and have a certain LTV ratio (25%).

So as I understand him, my only options after a year are refinancing it to an investment property, moving away for a job, or start making lots of babies. I mean it makes sense that they wouldn't allow you to continue to have/maintain owner-occupant financing when you're not living there.

Hopefully someone could shed some light on this situation. Have the FHA guidelines changed? Does anyone have up-to-date FHA documentation to explain the occupancy requirements and renting out the property? Should I look into another lender?

Appreciate any responses. Thanks!