I'm looking to buy a single family home and rent it out on Airbnb when I'm not there. I travel a lot on the weekends and for work during some weeks. It will be my primary residence when I'm not traveling though.
My question is, am I allowed to rent it out on Airbnb when I'm not there? The FHA bylaws seem to restrict short term rentals but I've heard of people doing it so I wasn't sure.
Would it be easier to do 5% down conventional for a primary if I plan to Airbnb it? My goal is to reduce down payment, closing costs and the interest rate which is why I wanted to do an FHA loan if possible.
FHA loan rules do not permit rentals of living units in the home purchased with an FHA mortgage if those rentals are for less than 30 days. The Airbnb business model is not acceptable under FHA loan rules, which means that if you purchase with an FHA mortgage, Airbnb operations are a violation of the FHA loan rules.
Yes it would be better to do 5% down conventional if that's the strategy you want to follow. Not a big difference in down payment and you don't have that restriction.
FHA loan rules do not permit rentals of living units in the home purchased with an FHA mortgage if those rentals are for less than 30 days. The Airbnb business model is not acceptable under FHA loan rules, which means that if you purchase with an FHA mortgage, Airbnb operations are a violation of the FHA loan rules.
Yes it would be better to do 5% down conventional if that's the strategy you want to follow. Not a big difference in down payment and you don't have that restriction.
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
3y
Evan,
If you can swing 15% down it will lower your payment, remove FHA MIP, and allow you to rent it out as a STR or LTR. This way you avoid mortgage fraud and any issue with HUD/FHA and can actually file the home under your Schedule E for the loss/profits.
A true Portfolio program allows for up to 85% LTV on a SFR or any 2-4 Unit multi-family investment rental.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
3y
@Evan DiLeonardi if you are buying a single-family home, you can often times go as low as 3% down. There really isn't any reason to do FHA if you have the credit to do conventional. FHA has a funding fee and PMI, while low down payment conventional typically does not. The fact that you are interested in doing Airbnb is just another indicator that you should go conventional.
Thank you John. I ended up doing a lot more research since I posted this and just closed on my place last week. I went with the conventional route to make it easier.