Not everybody who purchases a new home will live in it, or in all of it. According to a 2021 National Association of Realtors survey, almost half of Americans are interested in renting the extra space in their homes. More than 80% would invest in creating additional space to rent, and 53% would rent their entire homes.
While it may be an intriguing idea to rent out a house you just bought, there may be some restrictions and other things to keep in mind.
Here is what to know and consider when you’re thinking about renting out a house you just bought:
In most cases, you can rent out a home you just bought, but you need to work with your mortgage company.
When you get a mortgage for an owner-occupied home, you’re considered less of a risk to the bank and may qualify more easily for lower down payments and lower interest rates. All of these conditions change if you buy a house to rent out as an investment property, but if you already have your owner-occupied mortgage and now want to rent, you must contact your mortgage company. Some lenders may let you rent out your home with your existing terms and rate while others may charge you a fee, ask you to refinance, or require you to reside in the home for a period before you rent.
Some loan programs, like the FHA or USDA, require you to live in the home for a year before you can rent unless you have an extenuating circumstance, such as being required to relocate for a job.
Here’s what you need to find out about if you have a mortgage on a home you want to rent out:
HOAs may have a say in renting your home, too. You need to know whether your homeowners association has restrictions or outright bans on rentals. Some HOAs may limit the percentage of rental units at one time, set their own lease terms, and require tenant registration, deposit, or fees.
If your HOA approves, follow local and state laws that may cover security deposits, other lease terms, and rent control.
Here are some reasons why you should and should not rent out your new home.
It's important to consider these factors carefully before deciding whether it’s worth it to buy a home to rent out.
If you’re considering purchasing and renting out a new construction home from Brookfield Residential, it’s best to ask the community team for the rules and regulations as these are subject to change by location.
On a broader level, you can also check with any HOAs and local, state, and federal laws to determine whether renting your home is allowed. There also may be restrictions depending on your mortgage contract.
The decision to buy a new construction home is a major one, whether for your own use or as a rental. It’s important to be prepared for the road ahead. The Brookfield Residential blog offers a number of resources that can make the process easier. You can learn more about the homebuying process, home financing, and more.
When you’re ready, contact us to learn more about what our communities have to offer.