FHA loan after FHA loan

9 Replies

Newbie question!

If I buy a MF home as an owner occupant with an FHA loan, then plan to turn around and rent all units out (after a given period of time), will I be unable to secure an FHA loan for my next property? Is this why people refinance in the BRRR strategy? Thanks!

@Megan S. It is much easier to get another FHA loan if the you do not still have an FHA loan. So yes, that is why you see people refinance out.

There are some reasons you can get another FHA loan - if you can prove major life changes. An example would be a job change that is far from your current job location or if you can prove your family is growing (maybe marriage certificate or birth certificate of a child). But obviously the rules are built to try and stop you from doing exactly what you are thinking so the easiest is to refinance the first FHA loan out to a conforming loan.

@Megan S. all good items so far on this post. This is a very common topic. One thing that is a common sticking point is that when you buy with an FHA loan you only need a minimum of 3.5% down when buying a multi-family property - that's a HUGE advantage. BUT when you refinance from an FHA loan to a conventional loan, the conventional loan will require you to have 20% equity. So if you put down 3.5% and then need 20% to refinance...it might be a big sticking point. Make sure and plan accordingly. I'm not saying don't buy a multi with FHA money...just saying to know all the information so you know how to plan. Thanks!

@Megan S. Hey Megan, great question. I'm also trying to learn more about the rules/regs of the FHA loan. With my situation however, I'm Active duty currently living in Honolulu. I'm looking to buy a multi family (quad) in the Northeast, my hometown. I understand you're suppose to "reside" in one of the units but what I'm wondering is, can you use the FHA loan and just not rent out one of the units if you're physically not in that area.. Maybe let a family member live in that unit for free..? I'm just trying find out if there is anyway around those rules with the FHA loan while I'm in Hawaii trying to buy in Maine.. Another thought that comes to mind is that I will probably be visiting family there once a month.. So technically I will be living there but once a month.. Any input would be cool!

Don't want to do anything illegal, just wondering if there's a work around.

Thanks!

Originally posted by @Nick Monge :

@Megan S. Hey Megan, great question. I'm also trying to learn more about the rules/regs of the FHA loan. With my situation however, I'm Active duty currently living in Honolulu. I'm looking to buy a multi family (quad) in the Northeast, my hometown. I understand you're suppose to "reside" in one of the units but what I'm wondering is, can you use the FHA loan and just not rent out one of the units if you're physically not in that area.. Maybe let a family member live in that unit for free..? I'm just trying find out if there is anyway around those rules with the FHA loan while I'm in Hawaii trying to buy in Maine.. Another thought that comes to mind is that I will probably be visiting family there once a month.. So technically I will be living there but once a month.. Any input would be cool!

Don't want to do anything illegal, just wondering if there's a work around.

Thanks!

VA loans for active duty have the 'occupancy' flexibility you're seeking.

@Chris Mason - Hey Chris, my only issue is, I've already bought both of my SFH properties with my VA loan. I've heard I can't take out another VA loan.

Originally posted by @Nick Monge :

@Chris Mason - Hey Chris, my only issue is, I've already bought both of my SFH properties with my VA loan. I've heard I can't take out another VA loan.

You can refinance to free up VA eligibility. Rate will obviously go up (VA loans have the lowest), but that monthly payment increase will be less than the monthly cost of FHA mortgage insurance in about 19 out of 20 cases. The other 1 of 20 being where the old property has like a $100k loan and the new one will have a $400k loan.

@Chris Mason - Thanks for the input. Great idea! I'll definitely be putting some thought into this. 

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