FHA Guidelines for the Time Limit to Own a Property Before You Rent

Whether your family outgrew the home or you need to relocate for work, you may have many reasons for renting out your home. If you purchased your home with an FHA insured mortgage, you must meet certain FHA rules and regulations before you can begin looking for a tenant.

FHA Loan History

The Federal Housing Authority, or FHA, created insured loans in 1934 to help more families purchase their first home. The FHA -- a division of the U.S. Department of Housing and Urban Development, or HUD -- secures the mortgage for your home. This backing makes the mortgage less risky for the lender. In exchange, the lender is able to offer you low down payments, low closing costs and an easier-to-attain qualifying credit score.

Occupancy Requirements

Because FHA loans aim to put home ownership within the reach of more people, the Federal Housing Authority created some occupancy requirements. When you purchase a home with an FHA mortgage, you must agree to occupy the home within 60 days of closing and use it as your primary residence, or main home. To prove that you purchased the home with the intent to occupy it rather than as an investment property, you must then live in the home for a full year before renting it to anyone else.

Buying Another Home

If you decide to purchase another home after renting your primary residence, only a few circumstances exist under which you may obtain a second FHA mortgage. If your family outgrows your original FHA home, you may qualify for FHA financing on a larger primary residence. If you have to relocate to a new area that is too far away to allow a reasonable commute, FHA regulations allow you to rent your home and apply for another FHA mortgage using your tenant's lease as proof that your first mortgage will be paid. A co-borrower on an FHA mortgage who is moving out of the home due to divorce or other reasons may obtain an FHA mortgage on a new home if she qualifies for the loan.

Consequences

As long as you follow the regulations specified by the Federal Housing Authority, you should not face any difficulties or roadblocks in renting your home and moving on to another. However, if you attempt to rent your home before the end of the one year residency period, you could get caught. The FHA periodically checks on homes with FHA backed mortgages and if you are in violation of any of their rules and regulations, you may no longer be able to participate in any FHA programs or benefits.

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