Generating additional income through home rental can be an excellent option, but those with mortgages, particularly VA or FHA loans, must ensure their lenders permit it. Generally, individuals can rent their primary residence after a 12-month stay. The proliferation of Airbnb and similar online rental apps has led some homeowners to rent their properties, either partially or entirely, to offset their mortgage payments. Despite its increasing popularity, many lenders adhere to stringent occupancy criteria for loan repayments. Before posting your home on Airbnb, it’s crucial to understand the legalities and considerations involved with renting a mortgaged property.

Can I Rent Out My House on Airbnb If I Have a Mortgage?

Renting out a mortgaged house is legally allowed, but informing the lender is important to ensure you fulfill the necessary requirements, as different lenders have different occupancy rules. Your mortgage lender should permit you to rent your house if you have lived there for at least 12 months. Not every mortgage is the same; some lenders prefer homeowners to occupy their property as their primary residence. This is because defaulting is less likely for homeowners who have built up some equity in their property.

Mortgages on primary residences typically garner better terms than investment properties, and you may benefit from lower interest rates and easier qualifications. You must state your intentions for the property in your mortgage application, and failure to stick to your initial intentions may lead to penalties. Thus, contacting your lender and inquiring about their policies and exact rules on bringing in tenants is advisable.

Renting a House With a Mortgage

If you want to rent your house on Airbnb but need help figuring out how to proceed, here are a few tips to get you started:

Review the Terms of Your Loan

Before you embark on the exciting journey of becoming an Airbnb host, you must take stock of your current financial situation and assess the feasibility of converting your property into a rental unit. One of the first things you should consider is the terms of your existing loan. Understanding your loan agreement is essential because it can significantly impact your ability to rent your property.

The terms should be readily available online if you have a common mortgage type, such as an FHA or VA loan. However, it’s essential to thoroughly review and comprehend the agreement because it can contain specific clauses that may impact your renting plans. For example, FHA and USDA loans require borrowers to occupy the residence for at least one year unless under certain circumstances. Failure to comply with this requirement could have significant financial and legal consequences.

Thus, before you begin marketing your property as a rental unit, it’s always wise to research your loan terms and ensure that you are not violating any specific clauses or conditions that could harm you financially or legally. By doing your due diligence, you can avoid unnecessary risks and headaches and focus on developing a sound and profitable rental strategy. So, take the time to review your loan agreement and seek professional advice if necessary. Your peace of mind and financial stability depend on it.

Contact Your Lender

Aside from examining the loan conditions, it’s advisable to seek advice from your creditor. You may have overlooked a clause prohibiting putting your property up for rent. Even if the lease doesn’t disallow it, tenant prerequisites may exist. Furthermore, providing up-to-date contact information is essential if you only live in the house a few times a year.

Consult With Your Lawyer or Accountant

Consider speaking with your attorney, business manager, or accountant for insight. Your lawyer may offer tips about the landlord-tenant regulations in your area to prevent any legal entanglements during your quest to become an Airbnb host. Additionally, using your domicile as a source of income rather than as your main dwelling may lead to fiscal implications. Therefore, seeking guidance from your accountant before finalizing any decisions would be prudent.

Reach Out to Your Home Owners’ Association

If you reside in an arranged community or condo construction, you should converse with the homeowner’s association (HOA) regarding their policies concerning renters. Even if your financial institution allows you to rent your property, it’s important to consider any limitations an HOA may impose to avoid negative consequences.

Renting Out a House With a Mortgage FAQ

Can I lease my property while having an FHA loan? 

Yes, you can rent the property, but stipulations are in place. If you want to buy the home for the sole purpose of renting it, you won’t be eligible for an FHA loan. Upon closing the deal, you must confirm that you plan on living in the property within 60 days. You must also reside in the dwelling for a minimum of 12 months following the close of the sale. However, after 12 months, you may lease the property if you desire. Unique circumstances, such as a work-related relocation, may also permit you expedited departure from the property.

Can I lease my house with a VA loan? 

Yes, but you must satisfy the lender’s prerequisites, primarily the occupancy standard. Typically, this involves living in the dwelling as your primary residence for at least 12 months, allowing you to only rent it out after the first year.

Is it necessary to inform my lender if I plan on subletting a room in my house?

The answer varies depending on your lender, but informing them is generally advisable. While many lenders may not object as long as you continue to live in the house, they may have specific requirements or need information about your tenant. For instance, some lenders may require renters to have mortgage insurance in case of theft or damage to their belongings. Thus, it’s wise to make a quick call to review their policy on tenants, even if you’re only subletting a single room.

What are the implications of renting out your property on a residential mortgage?

Contact your lender and obtain their consent if you’re planning on renting your property through Airbnb. Failing to do so could lead to a breach of contract and legal action against you. Some lenders may permit subletting provided you comply with their loan conditions, while others may impose fees or adjust the mortgage terms for an investment property. Hence, having a clear plan and awareness of the potential consequences before accepting a tenant are imperative.

If you’d like more information on available financing options, contact the experts at Titan Funding in Boca Raton, Florida. We’d happily answer any questions and walk you through the application process. Call us at 855-929-1134 or complete our secure online form to get started today.