Can I get a conventional loan and FHA loan at the same time?
Member since 2023 · 5 posts · 5 votes
Can I get a conventional loan and FHA loan at the same time?
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Investor · Orange Park, FL · Member since 2019 · 173 posts · 108 votes
2yQuote from @Michael Emmanuel:
I just got an approval letter for a conventional loan for only 3% down. I didn't know that there was a thing for 3% down payment conventional loan.
Now that I have enough saved to buy 2 houses with 3% down, I wanna buy one with a conventional loan and one with FHA loan.
Has anyone done this before? Any idea how that works? Any advices and instructions to how make this work will be greatly appreciated.
Congrats on getting your approval letter for a 3% down conventional loan! It's true that there are conventional loan options out there with low down payment requirements, though many people aren't aware of them.
To your question about buying one house with a conventional loan and one with an FHA loan: Yes, it's possible, but there are several things you should keep in mind:
Primary Residence Requirement: Both FHA and many conventional loans have a primary residence requirement, which means you're expected to live in the home you purchase. If you're considering buying two homes at once, you'll need to decide which one will be your primary residence. The other property could potentially be considered an investment property.
FHA Loan Limits: FHA loans have specific loan limits based on the county and state where the property is located. You'll want to check these limits to ensure the home you're considering falls within them.
Mortgage Insurance: FHA loans come with both an upfront mortgage insurance premium (UFMIP) and an annual premium. On the other hand, with a low down payment conventional loan, you might have private mortgage insurance (PMI) until you reach a certain amount of equity in your home. These costs can add up, so be sure to factor them into your calculations.
Debt-to-Income (DTI) Ratio: Lenders will consider your DTI ratio when determining your loan eligibility. Buying two homes at once could significantly impact this ratio. Make sure you can comfortably afford both mortgage payments, insurance, taxes, and maintenance on both properties.
Future Flexibility: If you have an FHA loan on one property, and later want to buy another property with an FHA loan (perhaps you move or need a bigger home), you'd typically need to refinance the first property into a conventional loan or sell it. The FHA typically only allows you to have one loan at a time.
All the best with your investments,
KC
6 Replies
- Investor · Orange Park, FL · Member since 2019 · 173 posts · 108 votes2yHey there Michael,
Quote from @Michael Emmanuel:
I just got an approval letter for a conventional loan for only 3% down. I didn't know that there was a thing for 3% down payment conventional loan.
Now that I have enough saved to buy 2 houses with 3% down, I wanna buy one with a conventional loan and one with FHA loan.
Has anyone done this before? Any idea how that works? Any advices and instructions to how make this work will be greatly appreciated.
Congrats on getting your approval letter for a 3% down conventional loan! It's true that there are conventional loan options out there with low down payment requirements, though many people aren't aware of them.
To your question about buying one house with a conventional loan and one with an FHA loan: Yes, it's possible, but there are several things you should keep in mind:
Primary Residence Requirement: Both FHA and many conventional loans have a primary residence requirement, which means you're expected to live in the home you purchase. If you're considering buying two homes at once, you'll need to decide which one will be your primary residence. The other property could potentially be considered an investment property.
FHA Loan Limits: FHA loans have specific loan limits based on the county and state where the property is located. You'll want to check these limits to ensure the home you're considering falls within them.
Mortgage Insurance: FHA loans come with both an upfront mortgage insurance premium (UFMIP) and an annual premium. On the other hand, with a low down payment conventional loan, you might have private mortgage insurance (PMI) until you reach a certain amount of equity in your home. These costs can add up, so be sure to factor them into your calculations.
Debt-to-Income (DTI) Ratio: Lenders will consider your DTI ratio when determining your loan eligibility. Buying two homes at once could significantly impact this ratio. Make sure you can comfortably afford both mortgage payments, insurance, taxes, and maintenance on both properties.
Future Flexibility: If you have an FHA loan on one property, and later want to buy another property with an FHA loan (perhaps you move or need a bigger home), you'd typically need to refinance the first property into a conventional loan or sell it. The FHA typically only allows you to have one loan at a time.
All the best with your investments,
KC - Lender · Fort Lauderdale, FL (Lending in FL CT GA MI PA) · Member since 2022 · 470 posts · 349 votes2y
You can use both loans but not at the same time. They will both have a primary residence requirement. That requirement generally lasts a year, so you can use one now, live in it for a year, then move out and use the other for your next property.
- 2yDevin PetersonBusiness MemberLender · Sarasota, FL · Member since 2022 · 2k+ posts · 667 votes
Yes Michael this is possible but I would make sure that the lender is aware that you are doing two deals at once. This matters most beyond DTI and qualifying for both loans at the same time. You have almost double the amount of questions and docs to submit with each lender once underwriting sees money moving for two separate transactions. So make sure your communication is extra clear with the lender.
ProAlpha Capital56 Reviews - Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes2y
Owner occupied loans mean you have employment or income in that location and your lifestyle has to make sense. No you cannot believably owner occupy two houses at the same application date.
You could have a job transfer after you closed one and have the need to move and purchase another owner occupied house in another location.
You could suddenly take on your sister's five children after she passed and have need for a much larger house.
The reason has to make sense and be verified on paper. The employer has to write an offer letter/ you need enough income to carry the change. OR You will need the death certificate of sister and court papers saying you now are the parent of five extra people and again qualify with income.
Often the second owner occupied loan will have more conditions and hoops to explain. FHA has a one year rule, many down payment assistance loans have requirements to remain in place for a time period... so there is no easy answer to your question. The answer is it all depends and has to make sense. Generally you can't buy one owner occupied product loan then in a month buy another without some make sense paperwork as these loans are set up to provide owner homeownership not investment loans.
- Member since 2023 · 5 posts · 5 votes2y
Thanks everyone for the replies. That's very helpful.
So this conventional loan does not have any primary residence requirement, according to the loan officer. The lender said that only the first conventional loan can be with 3% down, and after that it would be with 20% down. There is a requirement for that loan, which is to not own a house before getting the loan. Meaning, if I get a house on FHA loan, I would no longer be able to get the 3% down conventional loan.
So the approach I was thinking to do is to purchase a rental house with the 3% down conventional loan first, then purchase right away another house with FHA loan for me to live in. How smooth would that be? An important question that pops up is: can I get FHA loan right after purchasing a house on a non-FHA loan? Is there a requirement for FHA loan that I haven't purchased a property recently?
As of being able to afford paying both mortgages and expenses for the long term, I was thinking that the first house on conventional loan would be rental, and the rent would cover all the payments and expenses. In that case, would that be excluded from my DTI ratio?
It's very exciting if I can make this work out.
Thank you,
- 2yAndrew PostellPro MemberLender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
@Michael Emmanuel A 3% down conventional loan absolutely, 100%, with no room for misinterpretation requires you to live in the property and occupy the property for 1 year. You cannot buy 2 homes at the same time with 3% down, or 3.5% down, or any combination of the 2...because those loans have a primary home requirement. You can work with whomever you want to of course...someone at that lender will catch this eventually even if the loan officer doesn't understand the loan requirements.
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