Using a FHA after a conventional loan

5 Replies

Morning everyone! I have a question in regards to acquiring an FHA loan. I am currently house-hacking a townhome in Phoenix Arizona that I intend on renting full time. I’ve lived here for 2 years, and used a conventional loan to get started. Now I’d like to use an FHA loan to house-hack a four-plex. Is this possible? What is the best course of action in getting into a Muti-family property?

@Nick Rendon yes, this is completely possible but there are a couple of details to know about with FHA loans when LEAVING your current primary residence as a rental in favor of another rental. First, as long as you purchase the next 4-plex and live in it, an FHA loan is totally fine. You can get "prequalified" from any lender that offers FHA loans to get this type of a loan. I would recommend to use a lender that will use the rental income to qualify you. Not every lender will do this unfortunately. So when interviewing lenders, ask the lender if they will use the rental income IMMEDIATELY to qualify you for the loan. Even if the other 3 units are vacant the answer should still be yes.

Secondly, it will be important to know if you need your current primary home rental income to qualify for the FHA loan. FHA does have a weird rule that states you CANNOT use rental income from a property you are vacating, unless you have 25% equity in the property. If you qualify without the rental income, then it doesn't matter what your equity is. But if you need that rental income, and need to prove you have 25% equity, you will need an appraisal on your current primary home to prove the amount of equity in order to be able to count that rental income. *WHEW* I know this is a lot of information so feel free to ask more questions if needed.

Thanks!

@Nick Rendon Yes, you should be able to use FHA on your next purchase, even a 4-Plex.

I would connect with a good local lender (glad to provide a referral) to confirm your buying power. Moving out of the one you are in may or may not create a liability for the payment at move out, that will be one of the tricky points to maneuver. Once it's a full-time rental and seasoned the rental income will be an offset, the question will be can they use that now.

Great plan!!!!!!!!!!

You can but be prepared to explain why you want to purchase that home and why very clearly. The red flags that signal occupation fraud is less square footage, worse condition, further commute and other reasons that look like you might stay where you are. 

If it is a move for work has more bedrooms or other improvements it makes a lot more sense. 

Totally possible but it will need be signed off on.

Thank you gentleman!!! I really appreciate the responses, I’m glad to hear that this is feasible!

@Nick Rendon If you need a trustable Loan Officer who is licensed in the state of Arizona, feel free to reach out!

Kind Regards,

Kathy Argento

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