Primary Residence Loan Requirements - 1 year vs 6 mo - 2nd home

[Michael Conrad]

Hi All,

I am researching the time requirements between purchasing primary residences. I was told over the phone by a local lender in CO that I would be able to buy another home as a primary residence. My wife and I bought our current house as a primary residence and closed in April of this year, 2018. We now just put another house under contract to move into and we have just been told that we don't have sufficient enough reason to buy another primary residence and that it has NOT been a FULL 12 months. From what it sounds, this requirement used to be pretty subjective with underwriting and is now a hard law. Something about Fannie Mae & Freddie Mac restrictions.

I was searching the forums as I always do and came across a post from a few years ago with a similar discussion topic. I saw that several lenders mentioned 6 months for conventional financing and one year for FHA. We bought our first home with 5% down and conventional financing. We are hoping to do the same with this next home. I was curious if this is something that you can still do.

The property is in the same price range as our current home. It is also a little over 1 mile away from our current house. We would rent out our current home and the carriage house in back.

Our current closing date is at the end of January. I guess April is only 60 days out from that; so maybe that could be an option to delay closing if I could make it lucrative for the current seller? Just trying to be creative and solve problems here.

I appreciate your guys' help and would love to be able to follow through on this deal.

Thanks,

Conrad

[Andrew Postell]

@Michael Conrad very sorry another lender told you this.  The general rule is going to be 12 months for nearly every situation.  Your occupancy "intent" of the property is usually for 12 months.  So if you intend to secure a property as a primary home you'll need to keep that as your primary for 12 months.  If there is reason to leave your property, there might be some leeway if you have a conventional loan.  For example, if your family grew in size or if your job transferred you further away, a conventional loan might make a case to provide you another loan under this circumstance because it would make sense for to need a new property.  Even after the 12 months you may need to expect to be required a lease on your subject property by some banks for this sort of a reason.  This can be a very "grey" area and you should certainly be interviewing your lender you are prequalified on this for their tollerances.

Also, incase others are researching this same subject there are some very "different" requirements for FHA loans when vacating your primary home and needing another FHA loan on another primary home.  FHA loans do allow you to have 2 loans at the same time with them (not every bank will follow this rule though) but if you need the rental income from the property you are vacating, then you will need 25% equity in that home in order to be able to use the rental income.  Again, not every loan officer/lender knows this rule.  It's really obscure and very rare that it comes into play but maybe this post will help someone in the future.