FAQ - Can I use an FHA loan to buy an investment property?

FAQ - I'm prequalified for an FHA loan at 3.5% down. I can't find a new primary residence that I like. Can I buy the foreclosure down the street?

A - NO.

I know, I'm a real bummer aren't I? But no, you can't us an FHA loan to buy an investment property. And I won't help you use an FHA loan to say that you are buying a new primary residence that I know you don't intend to occupy so please don't ask. Most likely you lender won't allow it either.

If you are up-sizing, down-sizing, moving across town or buying in your coveted neighborhood and you will be occupying the property you can legitimately utilize an FHA loan. Depending upon your financials you may not need to sell or rent your current property to qualify for the loan. If you must rent your current residence to qualify for the loan you will most likely need to show 30% equity in your current property and have a signed lease agreement with deposit in place prior to closing on your new loan.

If you are only interested in purchasing an investment property FHA is not the loan for you. You will want to look into conventional loans for investment purchases. To my knowledge the lowest down payment for an investment loan is 10%, but I am not an expert. For information on your loan options please speak to your lender!