Can You Rent Out a House With a Mortgage? (2025)

August 16, 2025 by Nicole Fishman Benoliel

If you have closed on a mortgage for a primary residence, you can typically rent it out after living in it for at least one year. Most mortgage agreements in the United States include a clause that requires you to move in and start using the home as your principal residence within 60 days of closing. If you intended to rent out the property right away, you should have informed your lender that you were applying for a loan for an investment property. Can You Rent Out a House With a Mortgage?

Since investment properties involve higher risks for lenders, you would likely have faced higher interest rates or additional fees.

However, many mortgage agreements have exceptions for extenuating circumstances, allowing you to seek written approval from your lender to bypass the primary residency Rent Out a House With a Mortgage requirement. If you have any questions, feel free to leave a comment!

Sample language from a mortgage note

The following paragraph from a sample mortgage note for a jumbo loan on a condo in NYC clearly outlines the borrower’s obligations regarding residency in the property after closing. It’s important to note that this language is relatively lenient. The lender cannot deny an exemption unless the refusal is reasonable.

Borrower’s Obligations to Occupy The Property

I will occupy the property and use it as my principal residence within 60 days after the date of signing this Security Instrument. I will continue to live in the property as my principal residence for a minimum of one year, starting from the date I first occupy the property.

However, if the lender agrees in writing, I may be exempt from this requirement. The lender cannot unreasonably refuse to grant this exemption. Additionally, I will not be required to occupy the property as my principal residence within the specified time frames if there are extenuating circumstances beyond my control.

Please note that the one-year minimum occupancy period begins only after I have moved in.

Can You Rent Out a House With a Mortgage? What are some examples of extenuating circumstances?

Extenuating circumstances that may allow you to rent out a property before the standard 12-month requirement can vary based on your specific lender and the type of mortgage you have. Here are some common examples of such circumstances:

Job Relocation: If you must move for work and your new job is located significantly far from your current home, your lender may permit you to rent out your property.
Medical Reasons: If you or a family member has a serious medical condition or disability that necessitates relocating to a different property or care facility, your lender may permit you to rent out your home.
Military Service: If you are a member of the military and must relocate due to a change in station or deployment, your lender may permit you to rent out your property.
Divorce: If you are going through a divorce and need to relocate from your current home, your lender may permit you to rent out your property.

It is essential to note that these situations do not automatically grant permission to rent out your property before the 12-month period has ended. You will need to discuss your specific situation with your lender and provide supporting documentation to show that your circumstances are indeed extenuating.

Primary vs investment property mortgages

Interest rates for mortgages on primary residences are generally lower than those for investment properties. This difference arises because lenders assess the risk associated with these two types of property loans in distinct ways. Lenders perceive primary residence mortgages as less risky compared to investment property mortgages. Homeowners are typically more motivated to prioritize their primary mortgage monthly payments to keep their homes, even during financial difficulties, rather than focusing on investment property mortgages.

Due to this increased risk, lenders often offer lower loan-to-value ratios (LTVs) for investment properties compared to primary residences. The loan-to-value ratio is calculated by dividing the loan amount by the property’s appraised value. A lower LTV indicates that the borrower has a larger equity stake in the property, providing the lender with greater security in case of default. Additionally, lenders tend to believe that primary residences will maintain lower LTVs over time because homeowners are more incentivized to build equity through principal paydowns.

An investor often owns multiple properties and mortgages, which increases the likelihood of default.

Additionally, an investment property might not generate the expected rental income, resulting in cash flow issues that can affect the borrower’s ability to make mortgage payments. If the borrower defaults, the lender may struggle to recoup their investment through foreclosure, as investment properties are generally more challenging to sell than primary residences.

To address the heightened risk associated with mortgages for investment properties, lenders usually charge higher interest rates. Since they are assuming greater risk by financing an investment property, lenders need to safeguard themselves against potential default.

A higher interest rate helps mitigate this risk, allowing the lender to earn a better return on their investment. Investors often purchase properties through a limited liability company (LLC), which further limits their risk to that specific property. In contrast, lenders can typically pursue legal action against a borrower of a primary residence in the event of default, especially when they know the borrower has other assets.

Can I rent out my house with a VA Loan?

VA loans are not for purchasing rental properties, and the VA has strict requirements that borrowers must occupy the property as their primary residence. However, the VA does not expect borrowers to live in the house indefinitely. Typically, borrowers must use the property as their primary residence for a minimum of 12 months, as outlined in most VA home loan agreements.

Additionally, borrowers must move into the property within 60 days of closing. After the initial occupancy period, borrowers may have the option to rent out the property to a tenant, even if that tenant is not affiliated with the military. However, they must obtain approval from the VA if they wish to rent out the property for an extended duration.

Note that borrowers can rent out a property immediately after purchasing it with a VA loan, provided they buy a multi-family property or duplex.

In this scenario, the borrower must occupy one of the units as their primary residence. However, they can rent out the other units to tenants as they choose.

The primary residency requirement is a critical aspect of the VA loan program. Nonetheless, some exceptions permit renting out the property after the initial occupancy period has ended, or when purchasing a multi-family property or a duplex. It’s essential to consult with your lender and the VA to ensure compliance with all applicable rules and regulations.

What about a Permanent Change of Station (PCS)?

A Permanent Change of Station (PCS) is an exception to the primary residency requirement for a VA loan. A PCS is a move ordered by the military, typically involving a transfer to a new duty station. In this scenario, the borrower must relocate to a new location and reside in government quarters or other temporary housing for a specified period. During this time, the borrower can rent out their primary residence without obtaining approval from the VA.

However, note that the borrower must still meet all of the other requirements of their VA loan, including making monthly mortgage payments on time and maintaining the property in good condition. Additionally, the borrower must intend to occupy the property as their primary residence again in the future, once their PCS orders have been completed. If the borrower wishes to rent out the property for an extended period, they must obtain approval from the VA.

Can I rent out my house with an FHA Loan or a conventional loan?

Yes, it is possible to rent out a house with an FHA mortgage, but there are specific guidelines that must be followed. First, if you plan to purchase a property solely for rental purposes, you will not qualify for an FHA loan. FHA loans are for owner-occupants rather than investors. When you close on an FHA loan for a property, you must sign a statement confirming that you intend to live in the property as your primary residence within 60 days.

Additionally, you must occupy the property for a minimum of 12 months following the closing date. This means you cannot rent out the property until you have lived there for a full year. However, some extenuating circumstances may allow you to leave the property before the 12 months are over, such as relocating for work.

Once you have met the 12-month occupancy requirement, you are free to rent out the property if you choose. Nevertheless, you must still adhere to specific rules regarding renting it out.

To rent out a property that has an FHA mortgage, you must adhere to the guidelines outlined in the FHA Handbook 4000.1.

Here are the key requirements you need to follow:

You must have lived in the property as your primary residence for at least 12 months before renting it out.
You must inform your mortgage lender of your intention to rent the property.
You must comply with all local and state laws and regulations concerning rental properties.
You must continue to make your mortgage payments on time, even if you no longer reside in the property.
You are responsible for maintaining the property to ensure it meets safety and habitability standards for your tenants.

Additionally, the FHA has specific guidelines regarding the amount of rent that can be charged and the types of rental agreements that are acceptable.