FHA Loan or 5% Conventional on 2nd Multi-Family when Married...

14 Replies

My husband and I just recently sold our single family home, and decided to invest that money into multi-family properties. We just used an FHA loan to purchase our first multi-family property. We live there and rent the other unit. The multi-family property we just purchased is only under my husbands name. I did not use any of my credentials - the bank did not even check my credit.

Since we are married, I keep reading online it is more complicated to purchase another multi-family home right away, even though I am not on the loan for the multi-family we just purchased. I know if we were not married I could use my own FHA loan right away, make it my primary, and then we have two properties.

So my question is...are there ways around this? Can I purchase my own multi-family using FHA or a lower down payment method and make the home I purchase my primary address? I really do not want to have to put down 15-20% to get the second multi-family since the bank will view it as an investment property. We also do not want to refinance out of the current FHA loan, because the interest rate is extremely low since we purchased during the height of COVID.

Any suggestions...

@Lisa Alston

The deal with FHA is you have to live there, so unless you are going to move into the property, you would have to treat it as an investment property; otherwise, it's mortgage fraud.

@Lisa Alston only legal way is to move away from your husband and occupy the new multi for a year. Primary address is not the same as living in the property. If you don't occupy then that would be considered mortgage fraud and punishable by up to $1 million fine and 30 years in the nearest federal pen. Unlikely you will be caught. But this is a public forum.

Originally posted by @Stephanie P. :

@Lisa Alston

The deal with FHA is you have to live there, so unless you are going to move into the property, you would have to treat it as an investment property; otherwise, it's mortgage fraud.

We would have no problem moving to the new multi family. So with moving there is a lower down payment just under my name even possible?

 

Originally posted by @Tim Herman :

@Lisa Alston only legal way is to move away from your husband and occupy the new multi for a year. Primary address is not the same as living in the property. If you don't occupy then that would be considered mortgage fraud and punishable by up to $1 million fine and 30 years in the nearest federal pen. Unlikely you will be caught. But this is a public forum.

 

We would have no problem moving to the new multi family. So with moving there is a lower down payment just under my name even possible? I am just trying to not clear out our entire savings to get the next property. 

So my next questions is...After a year of living in the current property, if we were to move into the new multi-family, and this property was only under my name, is it possible to have a lower than 15% down payment?

@Lisa Alston You said we, but unless circumstances have changed your husband would need to stay at your present multi. If you move closer to work then you can usually avoid the one year requirement. At one time there were 3% down conventional loans. I am not a lender so don't know the down payment for owner occupied multis. Maybe @Stephanie P. can chime in.

@Tim Herman After a year my husband can move even with the FHA loan, and he can rent out the entire home. He would completed his contract requirements.

With the next property just going under my name and credit, with both of us moving there after a year, being married, I am assuming then I would not need 15-20% down. 

Would I be able to get my own FHA being married since my husband would already have on under his name, or would I have to stick with a conventional loan? Either way is fine, the end goal is lowest down payment possible.

@Lisa Alston

Thanks @Tim Herman

Timing and structure is really important when financing. For the first home, you and your husband chose to use FHA, so you have to abide by, not only their guidelines, but how many underwriters interpret them. Most underwriters frown on the use of FHA to grow your investment portfolio, but after the one year occupancy requirement is satisfied, you would be eligible to get another FHA loan. You'd have to wait the requisite 12 months because that was the intent in the beginning, unless the move is because of a job move that's more than 100 miles away or because you need a bigger house because of a family change (like you're having a baby or a relative is coming to live with you).

Originally posted by @Lisa Alston :
Originally posted by @Stephanie P.:

@Lisa Alston

The deal with FHA is you have to live there, so unless you are going to move into the property, you would have to treat it as an investment property; otherwise, it's mortgage fraud.

We would have no problem moving to the new multi family. So with moving there is a lower down payment just under my name even possible?

No, you'd have to wait 12 months because the underwriter will assume the intent was for husband and wife to live together whether she's on the loan/deed or not.

 

@Stephanie P.

Since I was not on the original FHA with my husband for the current multi-family home that is solely in his name, would I be able to get an FHA loan on my own for another multi-family later on?

Would I be able to get a conventional on my own with less than 15-20% down on my own?

I just always heard and assumed that since your married it makes everything more difficult. 

Originally posted by @Lisa Alston :

@Stephanie P.

So can my husband have one FHA in his name, and can I have one FHA in my name while being married?

Can I get a conventional just in my name, and move to the new multi-family after 12 months with a low down payment?

To the FHA question, not unless you're divorced.

You can get a conventional loan after 12 months in the FHA loan, but the ltv is going to be lower unless you qualify for one of the conventional income restrictive loans. You'll also have a hard time convincing an underwriter that you're going to live there if it's not bigger or closer to work or if there are no other changes to your household size.