Two FHA Loans Due To Expanding Family Size At The Same Time

This Article Is About Two FHA Loans Due To Expanding Family Size At The Same Time 

In general, only one FHA loan is allowed per person with a family.

  • However, there are instances where you can keep your home with an FHA loan and get a second FHA loan on a new home purchase
  • More than one FHA Loans Due To Expanding Family Size is allowed per HUD Agency Guidelines
  • Normally, you can only have one FHA loan and need to pay the existing FHA loan to get another FHA loan if you purchase another home
  • However, HUD, the parent of FHA, will make exemptions where you can have multiple FHA Loans at the same time

In this blog, we will cover and discuss the exception to having only one FHA loan. We will explain how you can have a second FHA loan on a home purchase without having to pay off the first FHA loan.

HUD Exceptions To Having More Than One FHA Loan At The Same Time

Here are the exceptions of having multiple FHA Loans at the same time:

  • If the borrower is moving due to a job transfer that is 100 miles or more
  • A homebuyer can have a second FHA loan if they got a job transfer and/or a new job that is more than 100 miles from their existing home
  • They can keep the exiting home with the FHA loan and keep it as a rental
  • Two FHA Loans Due To Having a larger family is allowed under certain circumstances

In this blog, we will cover and discuss having multiple FHA Loans due to expanding family size.

About FHA Loans

What are the FHA loans

FHA Loans is the most popular loan program in the United States.

  • Borrowers with less than perfect credit, lower credit scores, and higher debt to income ratios can qualify for a 3.5% down payment FHA Loan with credit scores as low as 580 FICO
  • FHA loans are the easiest loan program to get an approve/eligible per automated underwriting system with prior bad credit and lower credit scores

Borrowers with under 580 credit scores down to 500 FICO can qualify for FHA Loans with a 10% down payment.

HUD Guidelines After Bankruptcy And Foreclosure

Homebuyers can qualify for FHA loans after bankruptcy and/or a housing event. There is a two year waiting period after the Chapter 7 Bankruptcy discharged date to qualify:

  • The waiting period of 3 years is required after foreclosure, deed in lieu of foreclosure, short sale
  • Outstanding collections and charged-off accounts do not have to be paid
  • Debt to income ratios can be capped at 46.9%/56.9% to get an approve/eligible per automated underwriting system (AUS). Manual underwriting is allowed on FHA Loans
  • Borrowers one year into a Chapter 13 Bankruptcy repayment can qualify with Trustee Approval via manual underwriting
  • There is no waiting period after Chapter 13 Bankruptcy discharge date with a manual underwrite

Debt to income ratios can be capped at 40% front end and 50% back end with two compensating factors on manual underwrites.

Two FHA Loans Due To Expanding Family Size Lending Requirements

Which means two FHA loans due to increasing loan requirements for the family

If a homeowner owns a home and has an FHA Loan but needs to purchase a larger home due to expanding the family size, this is allowed under HUD Guidelines. Let’s take a case scenario. Let’s say a homeowner owns a two-bedroom, one bathroom townhouse. The homeowner has no children. However, the townhome owner met someone with three children and two dogs. They cannot live in the townhome due to not enough space. The townhome owner can keep the townhouse with the FHA Loan and purchase a larger home due to a sudden increase in family size. This is allowed under HUD 4000.1 FHA handbook guidelines. The exiting property’s monthly principal, interest, taxes, insurance (PITI) plus HOA will be counted in the new mortgage debt to income ratio calculations. For more information on having multiple FHA Loans due to expanding the family size, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates available 7 days a week, evenings, weekends, and holidays. Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays on government and conventional loans. GCA Mortgage Group has a national reputation for being a one-stop-shop mortgage company. Besides not having any lender overlays on government and conventional loans, we offer dozens of non-QM and alternative lending loan programs.

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