FHA loan on 4 plex possible

[Danny Clair]

Hey everyone, first post here.

I was wondering about my options on a loan for a 4 plex and using FHA loan Financing.

My question is do you really have to live in one of the units for a whole year in order to qualify for the FHA loan? Reason I'm asking is because I just heard Grant Cordon saying on his radio show that all you to do is tell the bank you plan on living there and they really won't care if you don't. Any one familiar with this? Would work out great for me If I didn't have to live there because I'm living rent free now.

[Latasha Griffin]

When you close on the loan, you're essentially committing to live there for a year. Your getting a low FHA interest rate because you're going to occupy the property. Owner-occupied rates are typically lower and require you to put less down to purchase. FHA loans are only offered to consumers. If you dont intend to occupy any of the units, then youd need to get qualified for an investor loan which will require 20-25% down payment and will have a higher interest rate. The reason for the difference is that of you live in the property, you're less likely to abandon it if times get tough. You'd likely do all you could to keep your home. An investor might let their rental properties foreclose if facing financial difficulty but would probably still try to keep their primary home.

However, in a quad, you can still live for free if the price you buy at and the cash flow all works. If you're looking to get into investing in buy and hold real estate, the FHA loan on a small multifamily (2-4 units, e.g. duplex, triplex, quadplex) is a great way to start.

Also, you should know that misrepresenting your occupancy on a mortgage loan is fraud and punishable by up to 30 years in prison and up to $1M in damages. Not worth the risk.