Two FHA Loans At The Same Time Mortgage Guidelines

This Article Is About Two FHA Loans At The Same Time Mortgage Guidelines

FHA Loans are intended for owner-occupied primary residences.

There are instances where homeowners can get a sudden job relocation to a location where it is beyond commuting distance
On a case where a homeowner currently has an FHA Loan and has a job transfer that is at least 100 or more miles from their current residence
If the above holds true, they can qualify for Two FHA Loans At The Same Time:
FHA mortgages are not intended for second homes, vacation homes, nor investment homes
Since a homeowner lives mainly at their owner-occupied primary residence, HUD, the parent of FHA, only restricts home buyers to only one FHA loan at one time
However, there are exceptions and there are times where homeowners can have Two FHA Loans At The Same Time

Purpose For FHA Loans

The Federal Housing Administration created FHA Loans to assist hard-working Americans to become homeowners with very little money down and generous lending guidelines. FHA Loans is the most popular loan program in the United States.

A home buyer can qualify to become a homeowner with as little as a 3.5% down payment with a 580 credit score
Home Buyers can qualify for FHA Home Loans with outstanding collections and charge offs without having to pay off the outstanding balance
Homebuyers with not so perfect credit can qualify for FHA Loans
The main purpose of FHA Loans is to help promote owner-occupied homeownership and not investment properties nor second homes

There are exceptions to this having Two FHA Loans At The Same Time.

How To Qualify For Multiple FHA Loans

There are certain exceptions to having more Two FHA Loans At The Same Time.

If a homeowner currently has an FHA Loan and needs to upgrade to a larger home than the one he is living in, then they can have another home loan
But not Two FHA Loans At The Same Time
The deal needs to make sense in order to have a new owner-occupant property

For example, here is a case scenario:

if the homeowner is moving from a one-bedroom condominium to a single-family home
the reason is that he or she has children who are outgrowing their home
the deal makes sense to qualify for the new home purchase to be an owner-occupant home

However, if the homeowner is moving from a 3 bedroom home to a 4 bedroom home, the case does not make sense and the deal will most likely be scrutinized:

On cases like these, the mortgage lender might require that the home buyer has a real estate listing contract that they are selling their current home
The borrower on the second home purchase need to qualify for both mortgages
BUT CANNOT HAVE Two FHA Loans At The Same Time
If the exiting property is an FHA Loan, the new owner-occupant home purchase needs to be conventional
The homeowner can also keep the first property with the FHA mortgage loan as an investment property

If they have at least a 75% Loan to Value (LTV) on the exiting property, then they can use 75% of the potential rental income on the departing residence.

Borrower Relocates To A Different Area

Borrowers is allowed to have a second FHA loan if they are moving to another area due to job relocation. The new job is more than 100 miles and beyond commuting distance from their current owner-occupied primary residence. On cases where the homeowner with an FHA Loan gets a job transfer, this person can have Two FHA Loans At The Same Time:

It normally needs to be at least 100 or more miles
Reasons for such a move can be a job transfer
On cases like these, the borrower can keep their original home with the FHA mortgage loan as a rental
Or may opt to sell the home after the borrower moves into their new home
In either case, the borrower needs to qualify for both mortgages to qualify for the new FHA loan
This holds true unless they have at least 25% or more equity in their first home and a lease agreement

If this is the case, then a lease is necessary if they want to use 75% of their rental income to qualify for the new FHA mortgage loan.

You Can Have A Second FHA Loan If You Are A Co-Borrower On A FHA Loan

You can qualify for a second FHA loan if you are currently a co-borrower on an FHA loan.

Cases like these are common where a person is a co-borrower on a FHA loan but gets a divorce and leaves the household
That person can qualify for a second FHA loan even though they are currently a co-borrower
non-occupant co-borrowers can qualify for a second FHA loan as long as they intend on occupying the property
non-occupant co-borrowers can qualify for a FHA Loan for their own home purchase
The debt to income ratio on the co-signed loan will not count as long as the main borrower can provide proof that they have been making payments for the past 12 months and NOT the co-borrower
Non-occupant co-borrowers are borrowers who have cosigned on a FHA loan for a family member to qualify for that family member’s mortgage

But did not occupy the property.

FHA Guidelines FOR Two FHA Loans At The Same Time

The Federal Housing Administration has set tough strict FHA lending guidelines for those who are seeking a second FHA loan.

For those homebuyers who need 75% of potential rental income from exiting home to qualify for new mortgage, FHA requires that the first home have a 75% Loan to Value or lower
The potential rental income is derived by a home appraisal
The appraisal will determine the LTV
If the loan to value is higher than 75% LTV, the homeowner can pay down the balance so it is at a 75% Loan to Value or lesser
For those who need to use the rental income of the first home with the FHA loan, then a rental lease agreement needs to be provided to the FHA mortgage underwriter and 75% of the monthly rental income can be used

Home Buyers needing to qualify with direct lender with no overlays on government and conventional loans, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.