4 Ways To Have 2 FHA Loans At The Same Time

Certified Mortgage Advisor
NMLS 1701021
June 10, 2020

Two FHA loans at the same time

Now, we're talking about how do you have two FHA loans at the same time?

Primary Residences

So FHA only likes you to have loans for primary residences. That means for investments any sort of investment product, they do not want you to have an FHA loan.

Why only for Primary Residence

And the reason why is FHA is basically a government body. To provide access to affordable housing. So they don't want it to be abused as investment products.

There are a couple of ways that you can have two different FHA loans at the same time, or use them similarly to an investment product. So we're going to talk about four main ways that you can do this, and it's for exceptions to the rule.

Sell and purchase again

So it's only for primary residences. One thing you can know is that you can sell and then purchase again. No problem at all. So if you have an FHA loan right now, you can sell that house. That's attached to the FHA loan and then purchase a new one. With an FHA loan. No problem at all. You don't have to worry about any exceptions or any special rules. But if you want to retain your FHA loan right now and have a second one, then you need to follow one of four exceptions.

Exception 1: Relocation

So FHA allows you to relocate and get a new FHA loan. So for instance, let's say you live in one city right now, and then you're going to go relocate maybe because you had a job transition and you want to rent out this current home and purchase a new primary residence with an FHA loan. You absolutely can do that.

100 Miles

So FHA says you can relocate and establish residency outside of a reasonable commuting distance from your current principal residence. But that normally means is about a hundred miles. If it's any less than that. And underwriters, probably not going to accept that it's a reasonable commuting distance.

They're going to say, Hey, this kind of feels like it's a little bit of a, trying to abuse the system to get an investment loan with an FHA.

Option 2: Increase of family size

So increased independence and the properties building to meet the family needs. So for instance, let's say that right now, you're in a two-bedroom home and it's you, a spouse, and a child. Then let's say you have another child, so you've now added a dependent. That home isn't adequate to meet your family's needs. So you can now get a second FHA loan.

75% LTV or less

But there was one big stipulation here. You need to have a 75% loan to value. That means you need to have 25% equity before FHA is going to allow you to do this.

Option 3: Vacating jointly owned property

Vacating a jointly owned property that will remain occupied by a co-borrower. So let's say that you and your spouse are jointly on a mortgage right now. Let's say that there's a divorce and one of you vacates the property to go to another one. As long as the co-borrower is staying on the loan with that first property, you can now get an FHA loan. No problem at all there.

Option 4: Non-occupying co borrowers

So let's say that right now, maybe you signed on family members FHA loan for them, you co-signed for them, maybe they needed help. Maybe it was a child or a parent. They needed help getting an FHA loan. You co-sign for them where you now can go get your own primary residence with an FHA loan with no problems. So really it can be tricky. Sometimes have two FHA loans at the same time, what most people have to do if they don't follow in these exceptions is get that loan paid off either by paying down the mortgage or selling it, and then getting another FHA loan.

You can go FHA then refinance to conventional

Really getting a conventional loan after getting an FHA loan is no problem at all. The only thing with conventional is you're going to need to have a little higher credit score. You're going to have a little bit lower debt-to-income ratio and need to have a slightly higher down payment.

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