How Owner Occupancy Guidelines Affect FHA Mortgages

How Owner Occupancy Guidelines Affect FHA Mortgages

FHA mortgages can be a great help when buying a home. Too often we find ourselves worrying about high-interest rates and down payments. FHA mortgages and loans both ensure that the lender won’t lose out if the loan defaults, and that the buyer receives a fair interest rate. In order to qualify for an FHA loan, there a strict set of guidelines that need to be followed. An experienced real-estate agent like Linda Peterson should be consulted to navigate the potentially confusing minefield of FHA loan qualifications. One of the trickiest rules that is in place is whether or not the residence has to be owner-occupied to qualify for an FHA loan.  Let’s take a closer look:

Rules for owner occupancy

One thing to know about FHA loans and mortgages is that, legally, the buyer does need to occupy the property in some way to qualify. The qualification, however, isn’t as cut and dry as you might think, and there are a few things that will be taken into consideration in order to qualify for this kind of mortgage. For instance, if you are married, only you or your spouse needs to occupy the property at a time. In this way, you can secure an FHA mortgage on a second house or a house out-of-state with the help of your spouse.

It’s important to know that you will need to sign the mortgage paperwork before the property can legally be considered owner-occupied. As far as the FHA is concerned, a home that is bought with an FHA mortgage will be considered your primary residence. FHA guidelines also require you to occupy the home within sixty days of signing the mortgage note, and you must live in the residence for the majority of the calendar year. You may also only own one property purchased with an FHA-approved mortgage at a time. Be aware that federal loans are not available for investment properties unless you are refinancing a home with an FHA loan that was previously purchased as a primary residence.  To expand on this rule, if your primary home was financed with an FHA loan, and you later decide to move into a new property without selling your old one, you can still get the benefits of the FHA loan.

One great thing about FHA mortgages is that there is no prepayment penalty on them. You can pay your mortgage off in full at any time or sell your home with no stipulations. However, after purchasing a home with an FHA-approved loan, you must live in the residence for at least 12 months after the mortgage note is signed. You should also be aware that once you have lived in your home for 12 months, you are free to rent the property, even with an FHA loan.

Call Linda Peterson if you need help navigating an FHA loan

Linda Peterson is a leader in all things real estate in Fort Worth, TX. She is a co-host on the KRLD homebuyers radio program, which helps first-time buyers understand the ins and outs of home mortgages. She has also been a mentor to new real estate agents for years, spreading her knowledge and helpful attitude to others. Call Linda today at (817) 829-3000 for any home mortgage questions today.