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I'm currently in my primary residence with an FHA loan. I'd like to refinance for a better rate (as I can likely get it down at least 1.5 percentage points or so). I also intend to ultimately use this house as an investment property when it's time to move out.

There's an outside chance that I may have to move out much sooner than anticipated (potential out of state job opportunity) -- on the order of 3 - 6 months, likely.

I know FHA loans are intended for first time homeowners in their primary residence. I'm concerned about refinancing my FHA loan, but then having to turn around and leave. Will I be in some of violation of the loan terms? Initial research suggests that properties with an FHA loan must be the primary residence for a year before being able to move out. This concerns me.

I'm basically trying to figure out my options. My intention is to go through a mortgage broker to find the best refinance options. But I also know that streamline refinance of FHA loans are an option. While I'd prefer not to do that (would rather go with a different bank), it may allow me more flexibility. I also know there are possible exceptions if the reason for moving out is a job relocation.

Any insight is welcome. Let me know if you'd like any other information!

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  • How long have you lived at this place currently?
    – MrChrister
    Commented Oct 9, 2012 at 7:19
  • My wife has been there for over 4 years now. (I moved in later when we were still dating.)
    – kdawg
    Commented Oct 9, 2012 at 14:34
  • And not being familiar, the streamline FHA refinance will reset that clock? If you don't refi with FHA, then your loan terms are met, right?
    – MrChrister
    Commented Oct 9, 2012 at 16:22
  • Honestly, I do not know.
    – kdawg
    Commented Oct 9, 2012 at 19:59

2 Answers 2

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Most likely no. Just make sure to read the fine print. I'm in exactly the same boat, I have a house with an FHA loan and will be refinancing to conventional then using it as an investment. To refinance, you usually have to own 25% of your property before you can refinance, or buy another property with FHA financing.

If you are planning on refinancing with FHA, then things might not work. The only way around this is if you move like you said you might. Take a look at this article section (A) for Relocations, good stuff:

http://portal.hud.gov/FHAFAQ/controllerServlet?method=showPopup&faqId=1-6KT-879

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Streamline refinance is the way to go. You don't have to stay with the same bank to do so either. The big advantage of the streamline is the original appraisal is used for the refinance, so as long as you didn't have negative amortization(impossible in FHA anyways), you're good to go. It will be much less paperwork and looser credit standards. The ONLY downside is that upfront and monthly FHA mortgage insurance ticked up from where it was 2 years ago. If you're under a 80% LTV however you won't have to worry about it.

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  • Hi Jeff, welcome. I think the downvote was because your answer didn't address the main question about having to move out. Feel free to edit your response and include any insights.
    – MrChrister
    Commented Oct 9, 2012 at 7:20

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