FHA Mortgages & B&Bs
August 7th, 2007
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Okay, say you want to buy a bread and breakfast. A place in the country with fresh air, warm breakfasts and lots of dogs and antiques.
It is a nice vision, but could you finance such a property with an FHA loan?
It used to be that FHA financing was the program of choice for many investors, but those days are long gone. Today the FHA is looking to insure loans for owner-occupants; investors need not apply.
As to that B&B, forget about an FHA-backed mortgage. As the FHA explains in its guidelines, it “will not insure mortgages on commercial enterprises, boarding houses, hotels and motels, tourist houses, private clubs, bed and breakfast establishments, and fraternity or sorority houses.”
What can be financed with an FHA loan? “FHA loans can be used to finance and refinance “detached or semi-detached dwellings, townhouses or row houses, and individual units within FHA-approved condominium projects. Except as otherwise stated in this Handbook, FHA’s single-family programs are limited to owner-occupied principal residences only.”
The conflict here is that a B&B typically is someone’s “owner-occupied principal residence.”
Oh well, nice try.
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