Can I rent my house out if I still have a mortgage?

Most residential mortgage loans contain an owner-occupancy clause, which requires that you live in the property as your primary residence for a defined period. For conventional loans backed by Fannie Mae or Freddie Mac, the standard requirement is 12 months from closing. For FHA loans, the requirement is typically 12 months of owner-occupancy as a primary residence. VA loans require the borrower to certify intent to occupy and generally expect at least one year of residency before converting to a rental. These terms are in your original loan documents under the sections on occupancy and use of the property. If you cannot locate your documents, your loan servicer can confirm the specific terms on your note.

Renting out a property while still inside your required owner-occupancy period, without informing your lender, is considered occupancy fraud. This is not a minor paperwork issue. Lenders price loans for owner-occupied properties differently than for investment properties, and if a lender discovers the property was converted to a rental before the terms allowed, they can accelerate the loan (call it due immediately) or report the discrepancy to federal agencies if the loan is backed by FHA, VA, or Fannie/Freddie. In practice, enforcement varies and most lenders will work with borrowers who proactively disclose the situation, but the risk is real enough that it deserves a direct conversation with your servicer before you move out and place a tenant.

If you have lived in the home for at least 12 months (or the period specified in your note), you are generally free to convert the property to a rental without lender permission. There is no formal process required for conventional loans in most cases. You simply move out, prepare the property, and list it. That said, there are a few things to address: (1) your homeowner's insurance policy covers owner-occupied properties, not rentals. You need to convert to a landlord or dwelling fire policy before your first tenant moves in; (2) if your loan has an escrow account, your property taxes may adjust once the homestead exemption falls off, changing your monthly payment; and (3) your lender does not technically need to know, but updating your contact information and mailing address on the loan account is a practical step once you move.

Standard homeowner's insurance policies are written for owner-occupied dwellings. When you rent to a tenant, the coverage terms change in ways that can leave you exposed. Most homeowner's policies will deny claims that arise from a rental situation (a tenant's injury, water damage caused by tenant neglect, or a fire during a period when the home was listed but vacant). Before your first tenant takes possession, contact your insurance carrier and convert to a landlord policy (sometimes called a dwelling fire policy or rental property policy). Rates vary but typically run $800 to $1,400 per year for a standard 76179 single-family rental. If you have a lender escrow that pays your insurance, coordinate the policy change so there is no gap in coverage.

Talk to your servicer before renting if: you are still within your owner-occupancy period, you have an FHA or VA loan and are unsure of the specific terms, you want to refinance into an investment property loan (which may offer different rate structures), or you plan to purchase a second home and want to count rental income toward your DTI. That typically requires at least a signed lease and sometimes a track record of rental income on previous tax returns. For most conventional borrowers who have passed the 12-month mark and are simply moving to a new primary residence, the conversion is straightforward.