Question regarding FHA and residency requirement

[Nicole Heasley Beitenman]

I got into a discussion with my father recently about FHA loans and the requirement that you live in the home the majority of the year. We had a bit of a debate about whether or not the bank could do anything if they found out you were not living in the home as a primary resident. Would they be able to take the house away from you? How would they even know whether or not you were using it as your primary residence?

[Jerry Padilla]

@Nicole Heasley Beitenman

FHA is a great product for people that want to owner occupy and have little money to put down - going up to 4 units. You are required to live in the property for a year. Why take the risk of what could happen? You are only required to put 3.5% down on up to 4 units, so find a property that you would be willing to live in one of the units for at least a year. FHA has some strict guidelines, and you are limited to a maximum of owning 7 units total, including the subject property. So it is a good way to start out, because once you start investing, this product may not be available again, once your units start adding up. It is always best to refinance out of FHA once you have equity built up to avoid the mortgage insurance as with FHA it is typically for the life of the loan.