Whether you have to tell your mortgage company that you are going to rent your property depends on whether you are telling them in connection with the mortgage application.
Let me explain: If you want to buy a property and plan on buying it as an investment, i.e. a rental or a “fix-and-flip” you have to tell the mortgage company. In fact, the mortgage application asks specifically whether the property will be a primary residence, a second home or an investment property. The reason for this is that the lender’s risk varies in accordance with the use of the property. From data collected over many years, lenders have found that the default rate associated with investment property is higher than the default rate for primary residences. Thus, to offset and compensate for that risk, lenders require higher down-payments and charge higher rates for investment property. So, if you tell a lender that you are buying a house to live in when your real intention is to rent it out, you have just committed mortgage fraud — not a good idea.
On the other hand, if you buy a house to live in, then live in it for a time, there is nothing that says you have to tell the lender that you’ve bought a new house and decided to rent the old one; provided, however, that the mortgage document doesn’t contain a clause requiring you to do so. Once you’ve rented out the house, however, if you apply for a new mortgage to get cash-out or maybe get a lower rate, you will have to tell the new lender.