Is using an FHA loan for investing ethical?

[Kyle Marsh]

Hello,

Is using FHA loans or other low income/low downpayment loans as an investment strategy unethical? I spoke to a number of different lenders about my options to acquire financing as a college student, and a few times when I've mention looking into using an FHA loan or other FTHB loans to purchase a rental property, I am told that those loans are designed to help those who cannot necessarily afford a conventional loan and should not be used to "build a real estate empire." To clarify, I live in a relatively expensive market and I would plan to use an FHA loan to live in a single family for a year then rent it out after and refinance when I have the money when I graduate. From what it seems from the books and podcasts I've learned from, FHA loans are a popular method to invest in real estate for owner occupied properties. By using an FHA loan to purchase my first property and refinance when I graduate, am I unethically "bending the rules" to accelerate my wealth growth? Are there any rules against this? Should I approach lenders differently? I appreciate any input. Thank you.

[Joseph Firmin]

Ethics is subjective and personal. Compliance is typically black and white regulation (and then gray once attorneys are involved). Operating within the law and doing so literally is legal. The spirit of the law is another and up for interpretation, if you abuse it, then a court may find you in violation of the spirit of that law.

At the end of they day, do what you feel is right and you wouldn't mind your family reading about in the newspaper.