I really want to purchase a condo and rent it out to tenants for some extra cash flow here in Queens, NY.

I contacted a mortgage loan officer and he told me that I HAVE to put 20% down if I decide not to live in it and rent it out to tenants. If I put, say, 5% (or anything < 20%) down - then he said I have to live there for 1 year before renting out. Is this true? I've looked it up but I see that this rule applies to FHA loans, not a conventional loan which's what I want to take out.

Thanks for reading :)

  • 3
    "Is this true?" Since that loan officer told you that you have to, then presumably you have to for that loan company. Are you asking if there's a city/state/country-wide rule that says the minimum is 20%? Have you spoken to another company's loan officer? (And, do you know that the first officer knew you didn't want an FHA loan?)
    – TripeHound
    Commented Aug 1, 2020 at 13:05
  • 1
    I have the feeling you haven't really thought this through. How much net cash flow are you expecting after you use the rental income to pay the mortgage and any other associated condo fees and expenses?
    – chepner
    Commented Aug 1, 2020 at 13:09
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    @chepner I already know how much net cash flow I'm expecting even after paying mortgage and other condo fees. I just want to know if it's true that I have to live in the condo for 1 year if I put less than 20% down.
    – user99000
    Commented Aug 1, 2020 at 13:38
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    @user99000 What I meant is... you ask "Is this true?" to which the answer must be "yes it is true (at least for that particular loan company), because that was what the loan officer said". My comment was intended to see if you wanted to know whether this rule is one that that particular company has chosen to enforce, or whether there is some city/state/country-wide law or regulation that forces them to impose this rule. In the first case, a different lender may give a different answer; in the second case, all lenders will say the same.
    – TripeHound
    Commented Aug 1, 2020 at 13:45
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    @chepner I'm obviously going to speak to more than one loan officer. I just thought it'd be a good question to ask so I can have more intel when contacting the second loan officer. Everyone has to start somewhere.
    – user99000
    Commented Aug 1, 2020 at 13:56

1 Answer 1


This is how it works in my experience regarding getting a mortgage:

  • Owner occupied. If you put less than 20% down you have to get PMI.

  • Rental. You are required to put 20% down. Not all lenders will make loans for rental property.

Now some people start with a owner occupied and change to renting the property years later. They do this when they have to move for a job, or they outgrow the house. When that happens the lender doesn't require the owner to increase the equity by making a big payment. They also don't terminate the loan if they don't write loans for rental properties, they allow it to continue.

The loans I have had, required a statement that I would be occupying the home soon after settlement and planned to occupy it for al least x months afterwards.

Check all the settlement documents, there should be a statement regarding required occupancy. You may have even signed it during the application process or during the approval process.

If that lender requires a year of occupancy then that is what they require. If you know you are never going to live in the place then you only option is get a loan for rental property, unless you want to lie or commit fraud.

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