Help interpreting FHA "occupancy" clause??

[Rachel Luoto]

Good morning!

I am in the middle of an FHA owner-occupied live in flip. I was talking with my lender and he pointed out the following wording on my loan:

"This offer is being submitted that I/we will occupy the property as my/our primary residence for at least 12 months"

My thought was the statement above applied toward having an intention to not rent the property out, but now I'm wondering if it applies to my intention to sell as well.

I was considering selling after 6 months (as an owner occupied property there are no capital gains taxes, so it doesn't matter from a tax perspective when I sell)

Has anyone else come across this? Would I be penalized for selling early?

Thank you in advance!!

[Christopher Phillips]

@Rachel Luoto

that also implies your intention not to sell. FHA loans aren't meant for investors. If they think you are planning to fix it up and sell within 3-6 months they aren't going to approve the loan.

Also, the capital gains exemption assumes you live in the property 2 years or more out of the recent previous 5 years. So, if you buy and sell within 6 months you'll have to pay short term capital gains, which is based on your tax bracket.