FHA Loan Has Me Trapped... Need Help!

[VICTOR TEYE]

I bought a home in 2007 and refinanced in in 2011 using a FHA loan both times. I moved out of it after the refi and now it is rented. The current tenants are in a one year lease but may stay longer (possibly 5 years). I want to get into multifamily rentals and I currently have some money to start the process. But I can not get another FHA loan because I already have one, and to refinance out of this FHA loan and get into a conventional loan I'll need 25% down according to the bank (Wells Fargo) because it is now classified as a rental/investment property. I don't have 25% to put down to refi this home. My plan was to get into a duplex using a 203K loan and start out that way.

How can I get into a multifamily homes to start investing? Or am I stuck until I can refinance this home in 2019 when the value of the home is projected to have enough equity in it to get a conventional loan?

Thank you for your help!

[Upen Patel]

@VICTOR TEYE You have a few options:

1. Depending on the type of property (rental) and location, if you can show that you need to upside (family is grown) or move close to the job, then you might be able to get a FHA exception to get a 2nd FHA loan.

2. If you and the property in question qualify for Fannie/Freddie community loan, then you can buy the new property with just 10% down. No Rehab. That comes out of your pocket.

3. Buy the new property with 20% down. No Rehab. That comes out of your pocket.

4. Refinance the current property to conventional and free up the FHA loan.

5. Sell the current property to free up the FHA loan.

6. Wait until you have the funds to buy the new property.