How to get a second mortgage while my FHA loan is still active ?

5 Replies

I currently have a FHA loan on my primary residence that I live in. I've lived here for about 13 months consecutively. My monthly mortgage payment is $1200 a month and I will be renting for about $1675 a month. I want to purchase another home. Would my rent payment help with my debt to income ratio? I want to purchase another home. What loans or options would I have for the second home purchase ?

Thanks in advance for all the advice!

@Jordan Hunter , it purely depends on: how much EQUITY do you now have in your home?

If you still owe 80%+ of it's current value - you're out of luck regarding Refinancing, afaik.

But, if you owe less than 80% of its value, you should be able to Refinance out of your current FHA loan, so would be eligible for another. However, I believe you'll find that FHA-approved Lenders will NOT allow any rent proceeds out of your current primary to be allocated towards your Income, UNLESS you're moving at least 100 miles away! 

Welcome to BP. All the best...

Hello and welcome to BP.

I think you need to get out of the FHA (refi) if you plan on doing another FHA.

That could take a bit longer (years?) if you want equity Cash out of refi.

Its the slow start way. 

But look smarter investors then me (with experience!) will jump in on this too.

good hunting

Kirk

Jordan,

Generally bankers like to see two years worth of taxes showing the rental. It never hurts to go looking and ask the question. Your rent payment should help with your DTI ratio. Given that your rent income is $1675/mo, and using a 75% figure for what the bank will give you (this varies), I get $1256.25. Given your payment is $1200 (I am guessing that is PITI), then you have $56.25 in extra income each month, or $675 per year. Think of it as break even.

In theory, the property doesn't create a drag on your income. Your financing options are anything but FHA and first time homebuyer programs. You could, in theory, pay off the FHA with a standard mortgage, then go for another FHA. Otherwise, it's a standard mortgage, private money, owner finance, lease/option Sub2 or HML.

Hope that helps.

Good Luck!

Jim

Hi Jordan, You can get a second home with a conventional 3% down loan and keep your current home as a rental. Some lenders will allow to use 75% of market rent as income on the property you're keeping as a rental. Talk to different lenders. I was told by a couple of lenders I could do it in Maryland. 

thank you all!

They way I understand the FHA ruling is that you have to occupy the residence for one year and then it's elibgle to no longer be used as a primary residence. I don't expect to get another FHA loan, just want to be eligible for another mortgage of some kind. My home currently has less than 20% equity.

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