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FHA Loan Occupancy Requirements: A Reader Question

November 20, 2013


A reader asks, “My mother works in Florida and wants to finance a home in Kentucky. Can she get a FHA loan? I’ll be the co-owner of the home, but not the co-borrower on the loan. I’ll be at he home all the time.”

FHA loan rules for single family home loans require the borrower to certify that he or she will purchase the home for “personal occupancy”. The borrower is required to certify in writing that he or she will occupy the home within a specific amount of time after the loan closes.

These rules are found in HUD 4155.1, Chapter Four Section B. It states, “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.”

Those rules are fairly clear and don’t provide an exception, though the actual “move-in date” after closing may be flexible depending on circumstances if the borrower and lender make prior arrangements. This is not guaranteed and may be subject to further interpretation or discussion by the FHA.

Occupancy rules for FHA loans are designed to prevent abuses of the single-family loan system and while this reader’s question doesn’t suggest “abuses” the situation described here is outside the score of FHA loan rules. The best course of action may be to speak to a lender about possible options or alternatives that may be available that could address the needs of this situation. Would it make more sense for there to be two co-borrowers on this loan to satisfy FHA occupancy requirements?

That might depend greatly on the needs of the FHA loan applicants, but it’s certainly one course of action to consider. A discussion with the loan officer could be very helpful.

Do you have questions about FHA home loans? Ask us in the comments section. To qualify or get pre-approved for am FHA loan, visit www.FHA.com, which is a private company, not a government website.

Joe Wallace - Staff Writer

By Joe Wallace

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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