Financing a purchase with an FHA loan while currently in an FHA

[Ansel Blanco]

Looking for a strategy to purchase a triplex with a low money down FHA loan but currently in an FHA product in my primary residence.

Is this possible? My first thought is to move my home into a separate entity to clear my name of the FHA but the tax implications would be a nightmare, renting my own home to my self. Not to sure I want to do that.

Any ideas on strategy for low money down financing to get started while currently in a mortgage?

Thanks!

[Albert Bui]

Ansel you have many hurdles which I will list out:

1) first you have the self sufficiency rule from FHA which requires gross rents from all units (even the one you'd live in) X 75% must be higher than the monthly PITIA (principal, interest, taxes, insurance, assessments) this is only requred on 3-4 unit FHA properties

2) you need 3 months cash reserves to qualify for 3-4 unit properties

3) since you have an FHA loan already you'll need to have enough earned/qualifying income from your pay or other sources to qualify both FHA loans on top of qualifying for 1 of the 4 exceptions required by FHA below. You cannot use rental income on the new property to qualify unless your new FHA loan/property is 100+ miles away and you can document a min 25% or more equity in your current FHA property that you're vacating. This may make it difficult for many borrowers to qualify given the Debt to Income (DTI) ratios cannot exceed 46.99/56.99 unless you have a very high paying job or other income sources.

4) FHA has 4 exceptions to allow a borrower to have two outstanding FHA loans at one time which are: A) you cosigned on a FHA loan for someone else and now want to use FHA for yourself, B) you were legally separated or divorced and now want to use FHA to get your home but are tied on a current FHA loan with your ex-spouse, C) you've been relocated by your company to an area 100+ miles away and need to use FHA to purchase another home, or D) you can document your family size has grown significantly (mammogram or documentation for adoption, dependents, etc).

5) you can refinance your current FHA loan into conventional financing or other to free up your FHA so you wont be subject to #4 and #3 above

6) Even if you refinance out the FHA you'll have to deal with timing because you cant file "primary residence," multiple times within 6-12 months otherwise you will trigger mortgage fraud alerts. In the lender's minds were thinking "hey dude you just qualified for a primary home 4 months ago, what are you doing claiming another primary? Are you lieing to us?"

The above is what a good lender would be planning for you, anything less will put you in a world of headaches when dealing with multiple FHA loans, 3-4 unit FHA loans, and etc

Hope that helps.