Washington, DC · Member since 2014 · 32 posts · 5 votes
Hello BP Community,
I am looking to move from my current property to a new one in a different state. I currently hold a FHA loan on my first residence and I would like to house hack in a new city.
I have talked with loan officers about refinancing the first property to a conventional mortgage so that I could use FHA to get a 3-4 unit property, does anyone have experience with this strategy? My plan is to refinance my current loan to a conventional get a new loan on a 3-4 unit then ultimately refinance out of that one into another. If my math is correct, by the third property I should have enough cash to buy multi-units using conventional loans.
Does anyone see any flaws in my strategy? Any advice/criticism would be greatly appreciated!
It is for a job that is only 85 miles away and I don't know if it qualifies as a relocation because my company pays for my travel back and forth.
What is needed to prove a relocation? Could I prove the need to move by showing that my work location is 85 miles from my residence?
I Just did one of these and on departing residences (leaving your current primary) the underwriter required 25% equity on the vacated primary to use rental income to qualify when doing FHA on the new proposed property. The 100 mile rule that Chris mentions is true also so you'd need to meet both in order to use rental income to qualify however, if you have "enough," income to qualify for both homes with out "rental income," then you can avoid these pesky guidelines.
Below are reminders of several sections of FHA Handbook 4000.1 that apply to the “FHA 100 mile rule”
Departure Residence Rental Income: Using rental income from a property being vacated by the borrower: If rental Income is being derived from the Property being vacated by the Borrower, the Borrower must be relocating to an area more than 100 miles from the Borrower’s current Principal Residence.
Multiple FHA loans: A Borrower may be eligible to obtain another FHA-insured Mortgage without being required to sell an existing Property covered by an – insured Mortgage if the Borrower is:
Relocating or has relocated for an employment-related reason; and
Establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower’s current Principal Residence.
Military Personnel / Occupancy: The Lender must obtain a copy of the Borrower’s military orders evidencing the Borrower’s Active Duty status and that the duty station is more than 100 miles from the subject property.
Washington, DC · Member since 2014 · 32 posts · 5 votes
9y
I talked to my CU and I would be able to refinance out of my FHA since I bought my house with a discount and it has appreciated. I'll let you all know how it goes!
I talked to my CU and I would be able to refinance out of my FHA since I bought my house with a discount and it has appreciated. I'll let you all know how it goes!
If you can say "I bought my house with a discount and it has appreciated" EVERY time you need/want to move to continue with that strategy, then - the sky's the limit! Congrats...
Investor · Towson, MD · Member since 2014 · 472 posts · 257 votes
9y
Agreed, Brent! That's the goal. :)
Ultimately, as everyone else alluded to: you cannot have two FHA loans currently unless the rare circumstance about employer-sponsored moves > 100 miles. Your strategy should be to refinance your FHA property into a conventional (not an issue since you have the equity) and then purchase the new quadplex using FHA.