FHA loan rules - Posted by Concerned

Posted by Ben on October 30, 2000 at 13:56:19:

Thanks for the follow up. I am not a real estate lawyer. I am just passing along information that I read in a nationaly sydicated real estate article in my local newspaper. I still don’t think that I would want to take the chance anyway.

FHA loan rules - Posted by Concerned

Posted by Concerned on October 30, 2000 at 11:04:15:

Are all FHA loans owner-occupied? If it is what happens if
the new owner decides not to move in after the closing. Are there some penalties? This a 3-family home.

Re: FHA loan rules - Posted by Rob FL

Posted by Rob FL on October 30, 2000 at 20:27:51:

The standard FHA loan docs require you to move in within 60 days of closing and then live there for the next 12 months unless some sort of hardship arises.

Re: FHA loan rules - Posted by chris

Posted by chris on October 30, 2000 at 16:38:42:


make it simple. Of course it is illegal to move out right away. However, i did this, and no one checks. actually, i never moved in. There is an exception to the ONe year Rule…if you have good reason to move, the bank will consider it. For instance, i took a job that required city residency…this home is not in the city…therefore, i was justified in moving. They also consider other scenarios. Exceptions are considered by FHA…so it can be done…i did it with a 4-family.


in one case… - Posted by David Krulac

Posted by David Krulac on October 30, 2000 at 16:16:16:

that I’m familiar with the lender would let the new buyer assume the FHA loan because the old owner didn’t live in the property for ONE full year.

Re: FHA loan rules - Posted by Ginger Harris

Posted by Ginger Harris on October 30, 2000 at 11:56:40:

I would not do it either. I would call a local lender or two and ask some general questions. FHA is meant for home owners not investors. There might be some particular loans I think I remember but with more money down. I remember my kids recently buying a house FHA and they had to sign in escrow stating that they were going to live in the house. Ginger Harris

Re: FHA loan rules - Posted by Ben

Posted by Ben on October 30, 2000 at 11:10:08:

I belive the penelty is quite severe. I just bought my first home on an FHA loan. I think it is up to $500,000 fine and up to 5 years in prison. Basicly, don’t do it. Refinance and pay the reclaimation tax if you don’t want to live there.

Re: FHA loan rules - Posted by Bill Gatten

Posted by Bill Gatten on October 30, 2000 at 19:55:13:

You are right about FHA making exceptions…I’ve been involved in several transactiosn where that’s happened (also several involving CHFA, the Calif. Home Financing Authority), but they’re pretty stringent as a rule, and your story has to be a good one and you have to promise to be comming back within a year or so.

On the inspection part…you are just lucky I think. I know from personal experience that FHA does send out inspectors on a regular basis to make sure the borrower is in the property. Having been in the banking and lending and leasing business for some time (we were pretty close to these kinds of things). 'Same deal with Title 1’s (FHA home improvement loans)…plan on getting inspected to see what you did with the money if you take one out.


Re: FHA loan rules - Posted by Mark (SDCA)

Posted by Mark (SDCA) on October 30, 2000 at 13:49:16:

Huh?? I am not sure I follow what you are talking about? Bank fraud?? Ok… That I could believe. If you sign the owner occupancy tider you never intend to live there, that is one thing. But if you DO live there and then move out, that is something completely different.
I have an FHA loan. I lived in the property for 4+ years. I haven’t lived there in 5 years. I am still walking the streets a free man. Could you point me to the statute that details the 5 year penalty? I guess this has been passed recently.



Re: FHA loan rules - Posted by Bill Gatten

Posted by Bill Gatten on October 30, 2000 at 19:48:34:

Mark, I agree. If you take out an FHA loan and fail to meet the occupancy requirement (usually 1 year), the the lender will foreclose (and they do send out inspectors); but after the one-year I know of no circumstances where the loan would be treated any differently re. occupancy requirements tha would any other loan.