FHA loans

18 Replies

I own a rental property that I bought with an FHA loan (when I was an owner occupant). Since then I've gotten married. Is my wife eligible for an FHA loan on a house we want to buy to live in? I will need to be on the mortgage since she hasn't had her job for very long.

As long as you have the other FHA loan, no you can't be on the loan....unless you meet one of the few exemptions, had to move 50 miles for work, etc. the exceptions for having two FHA loans can be found on their web site.

If your wife can quickly pop out a few kids, to the point that your FHA-financed rental would no longer constitute adequate housing for your family, you could then get another FHA loan.

Gives a whole new meaning to the phrase, "Tonight we should work on our real estate investing plan."

If it's only my wife on the mortgage would that work?

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You can do a 1031 and roll the equity over into the new purchase but no you can't get that second FHA loan

You may want to consider refinancing out of the FHA mortgage, especially if you are paying PMI and are at or close to 20% equity (may be 25% not sure).

@Vincent Crane , @Matt Roberts cannot do a 1031 into a property to be his primary residence. That is not a qualified transaction.

Originally posted by @Max T. :

You may want to consider refinancing out of the FHA mortgage, especially if you are paying PMI and are at or close to 20% equity (may be 25% not sure).

 I have 30% equity but once you factor in a higher interest rate, closing costs, and the fact that it will be refinanced as an investment property it doesn't seem worth it. I don't want to sell it because the neighborhood is really hot. Too bad there's no way to invest equity. 

I'd look into a few methods (mostly identified above):

1) Refinance conventionally on your FHA home. Make sure your refinance doesn't require a 1 year occupancy. Buy a new home with FHA

2) Have your wife buy FHA if she can qualify somehow

3) Use a non-FHA product... there are a few banks that allow 5% down

Also, as much as you love her, don't put both of your names on the new purchase... you don't want to eat up the number of loans you are BOTH allowed to have ;)

Best of luck.

Originally posted by @Bryan O. :

I'd look into a few methods (mostly identified above):

1) Refinance conventionally on your FHA home. Make sure your refinance doesn't require a 1 year occupancy. Buy a new home with FHA

2) Have your wife buy FHA if she can qualify somehow

3) Use a non-FHA product... there are a few banks that allow 5% down

Also, as much as you love her, don't put both of your names on the new purchase... you don't want to eat up the number of loans you are BOTH allowed to have ;)

Best of luck.

 I've been learning about portfolio loans. I think I will wait until I have a few more properties and then try that route. Can you name any banks that might allow 5% down by chance?

Wells Fargo had that product. There as another big name one that I don't recall. I didn't pay too close attention because they didn't fit my approach. I think Bank of America was another, but don't quote me on that.

Originally posted by @Bryan O. :

Wells Fargo had that product. There as another big name one that I don't recall. I didn't pay too close attention because they didn't fit my approach. I think Bank of America was another, but don't quote me on that.

 Sorry to sound like such a newb but what was your approach?

I wanted 2-4 unit properties. FHA and VA loans allow up to 4 units. The other products were for single unit SFR. On top of that, my wife put the smack down on doing my original plan: buy 2-4 unit with FHA, live a year, buy 2-4 unit with VA, live a year, Hopefully refinance out of FHA and buy another. That would have given us up to 12 doors with a grand total of 1.2% down payments. That is the very simplified version, but you get the point. Using one of the the 5% down wouldn't work for me because I would have been restricted to SFR.

Originally posted by @Bryan O. :

I wanted 2-4 unit properties. FHA and VA loans allow up to 4 units. The other products were for single unit SFR. On top of that, my wife put the smack down on doing my original plan: buy 2-4 unit with FHA, live a year, buy 2-4 unit with VA, live a year, Hopefully refinance out of FHA and buy another. That would have given us up to 12 doors with a grand total of 1.2% down payments. That is the very simplified version, but you get the point. Using one of the the 5% down wouldn't work for me because I would have been restricted to SFR.

 So since you couldn't make your original plan happen (my wife won't go for that either) were you still able to get your 2-4 unit properties?

We bought a 3-unit with FHA this year and are living in it. I'm not allowed to do that any more ;)

The next move for the family will be to our "real" home.

Originally posted by @Bryan O. :

We bought a 3-unit with FHA this year and are living in it. I'm not allowed to do that any more ;)

The next move for the family will be to our "real" home.

 Were the income requirements very high to back up the 3-unit purchase?

I was able to qualify for the purchase based on my W-2 income alone, but the lender said that if I wanted to I could use the other 2 unit's leases and they would include 75% of the rent as personal income. This would SUBSTANTIALLY reduce the amount of income I would need from a job. NOTE: some lender's require you to have been a landlord already for 2 years before they will use rental income. Ask yours first to make sure. If not, check with other lenders. Some do, some don't.

Originally posted by @Bryan O. :

I was able to qualify for the purchase based on my W-2 income alone, but the lender said that if I wanted to I could use the other 2 unit's leases and they would include 75% of the rent as personal income. This would SUBSTANTIALLY reduce the amount of income I would need from a job. NOTE: some lender's require you to have been a landlord already for 2 years before they will use rental income. Ask yours first to make sure. If not, check with other lenders. Some do, some don't.

 That's so great that you can use the rent as personal income. Luckily I just reached the 2 year mark with my rental property. Thanks for answering all of my questions. 

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