Fha loan loan while owning properties

6 Replies

Hey bp, 

If I have not used a fha loan yet, would I be able to use it on a fourth property? Currently renting and not living in any of my properties . Has anyone done this? Would be looking for a 2-4 unit on the fourth.

Thanks

Ryan

This is absolutely fine. All that matters is that you intend to owner occupy and that you don’t currently have a FHA loan. You check both boxes.

If you buy a 3-4 unit, make sure the property meets self sufficiency guidelines. No such guideline for a 2 unit, so a little more straightforward. Good luck!

Originally posted by @Jerry Padilla :

@Ryan Keenan

FHA limits you to a total of 7 units including the primary residence you are purchasing. Each unit in the properties count. So if you own three duplexes, you will only be able to purchase a SFR. Feel free to reach out with any questions. Many people are not aware of this guideline. Below is a link. FHA Unit Restrictions - Chapter 4, Section B, page 13. 

 Hi Jerry, 

Not sure of your UW's take on this FHA guideline at prime lending, but at the company I am at their take was that its 7 financed properties in one specific area but not total through out the borrower portfolio since they were afraid the borrower would circumvent the FHA program to use it to acquire rental properties. So in theory she said he could have more than 7 if they weren't all local to the subject property that the borrower is trying to qualify for.

Is this your company's take as well?

I have not tried going above 7 but its something I'd like to test out eventually.  Who wants to be the guinea pig on this? lol

Originally posted by @Ryan Keenan :

Hey bp, 

If I have not used a fha loan yet, would I be able to use it on a fourth property? Currently renting and not living in any of my properties . Has anyone done this? Would be looking for a 2-4 unit on the fourth.

Thanks

Ryan

 HI Ryan,

If you do not currently have an FHA loan you'll be fine getting one as long as you owner occupy the property, 1-4 unit.

If you do have a FHA loan there are 4 exceptions you must meet in order to qualify for a 2nd FHA loan (yes it is possible) which are legal separation, you were a cosignor on prior FHA loan, larger family size, and relocation. Most people cant meet these so they have to refinance out of their current FHA loan to free it up for a subsequent use but if you do meet one of those exceptions then a borrower could conceivably get a 2nd FHA loan.

If you're moving out of a property that has a FHA loan and looking for a 2nd FHA loan you'd have to meet one of the above and 25% equity requirement on the property you're vacating as well. So its a lot tougher if you're leaving a fha property to go into another fha property. Its literally better to rent first then get another fha property.

@Albert Bui  

We don't have any FHA overlays and just go according to FHA guidelines. I copied the section in here that states every dwelling unit counts in each property. We count every unit total in their portfolio for 1-4 unit properties. It is up to the lender to ensure the compliance. FHA guidelines are the most difficult guidelines to read through and get clear cut answers in my opinion. Lol on the testing out. Let me know if you get it to go through. It does state for a good cause, you can get past that guideline........ But not sure how the need for that many units and an FHA loan will get through as a good cause.

Qualified investor entities are limited to a financial interest (that is, any type of ownership, regardless of the type of financing) in seven rental dwelling units, when the subject property is part of, adjacent to, or contiguous to, a property, subdivision or group of properties owned by the investor. The units that count toward this limitation include

each dwelling unit in a two, three, and four family property, and

 the rental units in an owner-occupied two, three, or four unit property. Notes: 

 The lender is responsible for ensuring compliance with this regulation. 

 Waivers to the seven unit limitation can only be initiated by the jurisdictional HOC for good cause.

The trip is what you cankeep and get away from the tax man

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