FHA Occupancy Requirements

When you purchase an FHA-insured home, you may have questions about home occupancy requirements. How soon do you have to move in after closing? What if you travel regularly for work and aren’t home for a significant amount of time throughout the year? Maybe you own another property elsewhere and occupy that residence seasonally—will that impact your eligibility for an FHA loan? What happens if you want to purchase and move to another property?

To help you better understand FHA occupancy requirements, we’ve got the general 411.

Basic FHA occupancy requirements

FHA-insured loans are designed to help everyday Americans pave the path to homeownership. However, FHA’s low rates and down payments are also appealing to crafty investors. To protect the program, FHA requires that you meet a few stipulations to prove the home will be your principal residence:

• Establish legitimate residency at the property within 60 days of closing
• Use your new home as your principal residence, which FHA defines as the place you live for the majority of a calendar year.

Additionally, FHA considers a residence owner-occupied if at least one borrower resides at the property. This can be helpful if you and your co-borrowers can’t live in the same place after closing due to professional commitments, military deployment, or if you’re helping a child purchase a first home.

FHA occupancy requirement exceptions

Because of principal residence occupancy requirements for FHA loans, the agency will not typically insure more than one loan for you at a time; however, there are certain circumstances in which the FHA permits multiple agency-insured mortgages:

• Relocation – If you’re making a job-related move to a new area beyond reasonable commuting distance from your current home and where affordable rental housing isn’t available. However, your relocation doesn’t have to be employer-mandated to qualify.
• Growing family – If the number of your dependents increases, making your current home no longer ideal. To qualify, you must provide proof of new dependents as well as the property’s failure to meet current family needs.
• Vacating a jointly owned property – Should your co-borrower decide to leave the property, whether it be due to divorce or other circumstances, the exiting borrower may be eligible for another FHA-insured mortgage.

Keep in mind that if you hope to hold two FHA loans at the same time, the loan-to-value ratio on the first property must be 75% or less in order for you to qualify for that second FHA mortgage loan.

Many additional factors come into play with FHA occupancy requirements. Luckily our knowledgeable experts at OVM Financial can answer all your questions. Give us a call today or apply for an FHA loan, so we can help you accomplish your dream of homeownership. You can also check out other helpful articles on FHA minimum down payments and FHA loan closing costs.