Problem with FHA Loan Underwriting

[Erik Stewart]

Hello BP,

The problem is this: 

We refinanced in our home in late November and since then we have found a 4 plex to purchase. We were planning on moving out of our home and into the 4 plex to house hack for a year, while renting out our SFR. However, when we refinanced (conventional loan), we signed paperwork saying we would live here for at least 12 months.

Now underwriting is saying FHA won't let the deal go through because "we would violate the terms of our loan" on the SFR. They also think it is strange that we are moving from a 1600 sq/ft house into a 2 bedroom apartment.

Anyone have any experience with this specifically and advice on how to convince underwriting/FHA that we will not violate the terms of the FHA loan we are applying for? Is this issue outside of the scope of their considerations.

Note: We originally purchased our home in 2009 with an FHA and didn't violate the terms of that loan, so we have a good history with FHA. Also, the only reason we refinanced was so that we could use the FHA loan product once more, and since we most likely won't refi this upcoming 4 plex,

It is our (my wife and my) opinion that this should not negatively impact their confidence in us.

Please let me know your experience with this and the best solutions on this matter

Much appreciated,

Erik

[Erik Stewart]

@Mindy Jensen @Wayne Brooks @Brent Coombs @Upen Patel @Marian Smith @Greg H.

Special thanks to Mariam who suggested simply calling my SFR mortgage holder and asking for a waiver. I explained to them our situation and they approved the occupancy requirement waiver!

Everyone else, thank you for all your input, I truly appreciate the honest feedback. I ended up purchasing the 4 plex with an FHA loan and kept the SFR for a rental. The key was when I submitted a request to waive the occupancy requirements by the mortgage holder of my SFR. They agreed, and I was no longer required to live in my SFR for the entire 1 year, thus solving the problem the underwriter and FHA were faced with. I don't know how common this type of success with getting a waiver is, but I thought I would let you all know the end result for your information and advice giving in the future.

Thanks again for all the feedback!

Erik