05 Aug A primary way it does this is through a government-guaranteed loan program
An FHA home, that is a home financed with a Federal Housing Administration-backed loan, can be rented out under defined circumstance. The information below explains what an FAH home loan is, when it is allowable to rent it out, important exceptions and the reason for the restriction.
Among other mandates, the Federal Housing Administration is tasked with fostering home ownership in the United States. These FHA home loans allow individuals to purchase a home with less down and lower interest rates. Because the FHA guarantees the loans against default, lenders have less risk, so borrowing criteria and interest rates can be lower. However, the FHA pays for this guarantee program through insurance premiums folded into the FHA home loan amount paid by the homeowner. Still, even with the added insurance premium, FHA home loans are almost always more competitive than conventional loans.
While the FHA home loan program offers distinct advantages to borrowers, there are restrictions. Among them, the homeowner must occupy the FHA home within 60 days of purchasing it and then must live in it for one year from the date of occupancy before renting it out.
Be aware, if you rent your FHA home, it is more difficult to get a second FHA home loan when you still have one in place. There are two exceptions to this general rule:
- Expanding Family - If your family grows beyond what your house can reasonably accommodate, you can be authorized for a second FHA home loan. You will be required to document the number of family members you have. The exception is available for blended families so that if by marriage, you gain children that exceed what your current bedroom configuration can accommodate, you will be apply to apply for a second FHA home loan.
- Extreme Commute - If you take a new job and the commute causes a hardship, you can also be exempted from the restrictions on getting a second FHA home loan.