Can A Borrower Have Multiple FHA Loans At Same Time?

This BLOG On Can A Borrower Have Multiple FHA Loans At Same Time Was UPDATED On November 2nd, 2017

Qualifying For Multiple FHA Loans

FHA Loans are for owner occupant primary homes. A homeowner can live in one property. However, many homeowners need to move to another home due to the following reasons:

  • Growing Family so they may need to move to a larger home
  • Downsizing: Children may move out of the home to either go to college or start their own families so they may need to move to a smaller home
  • Job Relocation: Homeowner may need to move to another home closer to their place of employment

The topic of this BLOG is can a home buyer qualify for multiple FHA Loans and if so, what are the requirements.

About FHA Loans

The Federal Housing Administration has created FHA mortgage loans to make home ownership affordable to all Americans. FHA Loans are the most popular loan program in the United States.

Here are the benefits of FHA Loans and why it is so popular:

  • Minimum 580 Credit Score Requirements For 3.5% down payment on home purchase
  • Debt To Income Ratio up to 46.9% DTI Front End: 56.9% DTI Back End to get approve/eligible per Automated Underwriting System
  • Outstanding Collections and Charge Off Accounts do not have to paid to qualify for FHA Loans
  • 2 Year Waiting Period After Chapter 7 Bankruptcy discharged date 
  • Consumers one year into a Chapter 13 Bankruptcy Repayment Period can qualify for FHA Loans with Trustee Approval via Manual Underwriting
  • No Waiting Period After Chapter 7 Bankruptcy discharged date to qualify for FHA Loans
  • 3 Year Waiting Period After Foreclosure, Short Sale, and Deed In Lieu Of Foreclosure to qualify for FHA Loans
  • The FHA insured mortgage loan program is a wonderful vehicle for a first time home buyer
  • FHA Loans are a great loan program for those home buyers who have had some prior credit problems have a chance in becoming homeowners again. 
  • FHA insured mortgage loan guidelines are much more lenient that conventional loan programs

FHA Insured Mortgage Loan Programs; Multiple FHA Loans

For those mortgage loans borrowers who have had a prior bankruptcy and/or foreclosure,  they may qualify for FHA insured mortgage loans as long as they have passed their mandatory waiting periods.

Home Buyers can benefit from FHA Loans if they have the following:

  • Less than perfect credit
  • Higher debt to income ratios
  • Outstanding collections
  • Outstanding charge offs
  • Judgments
  • Tax liens

However, FHA Loans are for owner occupant properties only.

How Can One Qualify For Multiple FHA Loans At Same Time

Mortgage Borrowers can have multiple FHA Loans at the same time under certain circumstances

  • A Mortgage Borrower can qualify for multiple FHA Loans at Same Time if they are relocating and establishing primary residency in an area and/or location that is beyond reasonable commuting distance
  • The relocation needs to be at least 100 miles or more from work of employment
  • Out of state employment is a good reason
  • Mortgage Borrower was and/or will be a non-occupant co-borrower with a joint interest in a real estate property that is purchase by other members of his or her family as their primary residence

Two Owner Occupant Properties

Mortgage Borrowers can have a second owner occupant property financing and not sell an exiting property under the following conditions:

  • If a home buyer is exiting an existing owner occupant property and buying a new home, they can qualify for another owner occupant property under the following conditions
    • They are up sizing to a larger home (30% or larger) due to growing family
    • They are down sizing to a smaller home due to becoming empty nesters
    • There is no distance requirements
  • However, they cannot move to a similar and like home nearby 
  • If they are moving to a nearby home that is similar in value and/or square footage then they cannot qualify as a owner occupant home
  • Similar homes on a second home owner occupant purchase will be considered investment homes

Again, the only way to qualify for multiple FHA Loans At The Same Time is to have a job relocation which is 100 miles or more. If a person needs to purchase a second home that is owner occupant and keep the exiting home as a rental, then they cannot have both homes with FHA Financing. If the exiting home is FHA, the new owner occupant home purchase needs to be conventional loan. If the first home is conventional financing, then they can purchase the second home with an FHA Loan. If the second home purchase needs to be FHA Loan and the first home is FHA, then the exiting home needs to be refinanced into a conventional or other loan program.

Gustan Cho NMLS ID # 873293

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.