Gustan Cho The Mortgage Expert,
Publish On: March 1, 2024
This guide covers HUD mortgage guidelines on having multiple FHA loans at the same time. One of the most frequently asked questions from homebuyers is can I qualify and get approved for multiple FHA loans at the same time. FHA loans are for owner-occupant primary homes. A homeowner can live in one property. There are instances where a homeowner need to relocate for one or more reasons and buy another home without selling the existing home. 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
- If you are a non-occupant co-borrower, you can qualify for an FHA Loan as the main borrower
- If two people are on a current FHA Loan but one of them needs to move out, they can qualify for an FHA Loan
In the following paragraph, we will cover the frequently asked question can a home buyer qualify for multiple FHA loans at the same time. We will discuss the HUD guidelines of qualifying and getting approved for multiple FHA loans at the same time.
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. The minimum credit score required on FHA loans is 500 FICO. Howvever, to qualify for FHA loans with under 580 and down to 500 FICO, borrowers need to put a 10% down payment versus the standard 3.5% down payment. Here are the benefits of FHA loans and why it is so popular:
- HUD requires a minimum 580 credit score for a 3.5% down payment home purchase FHA loan
- 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 guidelines are much more lenient that conventional loan programs. Click here to apply for FHA loan for First time home buyer
What Are The HUD Guidelines on Multiple FHA Loans at The Same Time
For those borrowers who have had a prior bankruptcy 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
Borrowers can have more than one FHA loans at the same time under certain circumstances. A borrower can qualify for more than one FHA loans at same time. This holds true if they are relocating and establishing primary residency in an area or location that is beyond reasonable commuting distance. The relocation needs to be at least 100 miles or more from the work of employment. Out of state employment is a good reason. The borrower was or will be a non-occupant co-borrower with a joint interest in a real estate property that is purchased by other members of his or her family as their primary residence.
Two Owner Occupant Properties
Borrowers can have a second owner occupant property financing and not sell an exiting property under certain conditions. There are instances where borrowers cannot sell their existing home and need to rent it and purchase a second home with another FHA loan. If a homebuyer 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 upsizing to a larger home (30% or larger) due to a growing family
- They are down sizing to a smaller home due to becoming empty nesters
- There are no distance requirements as long as the exiting property has 25% equity
- However, they cannot move to a similar and like home nearby if the second primary home is similar in size as the exiting home
- If they are moving to a nearby home that is similar in value or square footage then they cannot qualify as an owner occupant home
- Similar homes on a second homeowner-occupant purchase will be considered investment homes
- Again, the only way to qualify for two FHA lans 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 can have two FHA loans at the same time if the exiting home has 25% or more equity
- If the exiting home is FHA, the new owner occupant home purchase needs to be a 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 an FHA loan and the first home is FHA, then the exiting home needs to be refinanced into a conventional or another loan program. If a home buyer is a non-occupant co-borrower on another FHA loan, they can qualify to purchase an FHA loan as the main borrower on a new home. If two people are on an FHA loan as co-borrowers and one person want to leave that property and buy another home for themselves, they can qualify for an FHA loan.
Qualifying For an Multiple FHA Loans at the Same Time With a Lender With No Overlays
Not all mortgage lenders have the same lending requirements on FHA loans. Even though a borrower meets HUD guidelines on HUD guidelines at the same time, the lender may not want to finance the borrower due to lender overlays. Lenders can have higher lending requirements than HUD agency mortgage guidelines. For more information on this topic or other mortgage-related topics, please contact us at Gustan Cho Associates at 800-900-8569. Text us for faster response. Or email us at gcho@gustancho.com. The Team at Gustan Cho Associates are available 7 days a week, evenings, weekends, and holidays.
