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Can you rent out your home, or a room in your home, after you purchase it?

Orion’s brokers field their share of questions from their clients about occupancy. More specifically, when someone signs loan documents for an owner-occupied loan, these include the “Intent to Occupy”, whereby the borrower acknowledges that the property will be their primary residence and the intention is to occupy it as such. If, after living in the home for several years, a borrower decides to purchase a new home as their primary residence without having to sell their current home, then they can rent out the initial primary and not be in violation of their mortgage and intent to occupy because they have occupied it for the past few years.

If, however, several months after purchasing a primary residence a client moves out of the home and rent it out, the lender can file a notice of default with the possibility of foreclosure due to violating the terms of the Note. In some situations, extenuating circumstances may be considered by a lender, but there is no guarantee.

Renting out a room while a client is occupying the property will not land the borrower in hot water. Orion’s brokers know that an issue may arise, however, from the local zoning ordinances for the property and the length of term of the rental. Within the increasing popularity of the short-term rental, homeowners in or near vacation destinations are finding it easy to pick up some additional income by renting out a room or two in their home for weekends or perhaps longer to tourists. With the increase in these types of housing transactions, many long-term residents in areas such as these are trying to prevent these rentals by lobbying with local governments. Some have already done so successfully.

Many cities in areas where Orion has broker clients have prohibited rentals for less than 30 days at a time to try to eliminate these occupancies, and many others are actively discussing similar ordinances. Ask your Orion AE – they’re a great source for more information!


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