FHA Strategy help needed!

7 Replies

Hello everyone, I just had a quick question about FHA loans. I've been reading these forums like it's my religion and I came across a post recently about FHA loans and how the limit is 4. If I get married, can I still acquire 4 FHA loans and my wife acquire 4 more? Or would WE only be able to acquire 4 total? I know you can only be in one FHA loan at a time, but my goal was to basically acquire one per year and we just move after a year into a new place, hack it for a year...refi and move to the next spot.

@Joe Mende I don't believe you can have more than one FHA loan at a time. You would typically have to switch to conventional financing after you have used up your FHA loan. You should really run this by a lender. I have a great investor friendly lender in the Chicago area. If you need a referral just PM me.

Most of my investors in the Chicago suburbs are using 5% down conventional as their first loan. They are then moving to an FHA loan as their second loan. From then on, it is the 25% down conventional slog.

I think you may have confused the four unit limit for FHA as a four loan limit? As long as you owner occupy the first property for a year and a day your wife could get a FHA loan in her name and you both could move into it. So functionally your limit would be two loans.

I have heard that a second FHA can be pulled if the person has a good reason to need to move but I would check with a lender in that and I wouldn’t count on it. If your plan is to owner occupy, move out after an appropriate time has passed and buy a new property you can do so with a 5% down conventional loan.

Another thought you may be using FHA and conventional loans interchangeably. (They are not the same all FHA loans are conventional but not all conventional loans are FHA) If so you are correct that the limit for many banks is four. Some allow ten and some portfolio lenders will allow even more.

@Joe Mende the good thing about Bigger Pockets is the amount of great information you can get. But every once in a while, there is some incorrect information too. And that person who posted was probably told wrong by someone else so don't take it out on them. Here's the rundown on FHA loans:

  • You can receive as many FHA loans in your lifetime as you like.
  • FHA does not allow you to have more than one FHA loan at a time UNLESS you have justification for it.
    • For example:  Your family grew and you need more room.  Or your job transferred you and you need a home outside of your pre-existing commuting area (generally 90 miles)
  • So if you are moving from one home with an FHA loan and you are moving up the street, and your family size did not change, then you would need to do a conventional loan.
  • But if you refinance that FHA loan into a conventional loan you could get as many as you need.
  • Keep in mind that if you used 3.5% down on a duplex, a conventional loan will require you to have 15% equity to refinance.  If it is a single family home, then you would only need 5% equity.  So depending on the property you are house hacking this might have an impact on your ability to refinance.

There are a lot of rules to these so feel free to tag me if  you have any other questions.  Thanks!

Originally posted by @Andrew Postell :

@Joe Mende the good thing about Bigger Pockets is the amount of great information you can get. But every once in a while, there is some incorrect information too. And that person who posted was probably told wrong by someone else so don't take it out on them. Here's the rundown on FHA loans:

  • You can receive as many FHA loans in your lifetime as you like.
  • FHA does not allow you to have more than one FHA loan at a time UNLESS you have justification for it.
    • For example:  Your family grew and you need more room.  Or your job transferred you and you need a home outside of your pre-existing commuting area (generally 90 miles)
  • So if you are moving from one home with an FHA loan and you are moving up the street, and your family size did not change, then you would need to do a conventional loan.
  • But if you refinance that FHA loan into a conventional loan you could get as many as you need.
  • Keep in mind that if you used 3.5% down on a duplex, a conventional loan will require you to have 15% equity to refinance.  If it is a single family home, then you would only need 5% equity.  So depending on the property you are house hacking this might have an impact on your ability to refinance.

There are a lot of rules to these so feel free to tag me if  you have any other questions.  Thanks!

 Andrew,

Thanks for the info! So, in order to get that additional 15% equity, significant improvements would need to be done to the property to appreciate the value, correct? This is where FHA always gets tricky to me. To me, I want to get a "fixer-upper" with FHA so that it's a lot easier to increase the value. But, FHA has so many regulations that most fixer-uppers don't qualify for FHA because they're usually being sold "as-is". So, how do you get around that?! I was looking for an FHA duplex in Chicago and eventually just went the conventional route because nothing qualified for FHA in the price range I was looking for.

@Joe Mende ah, yes, this is a common problem. But there are FHA "renovation" loans that are available to you. They are more complicated though but you can absolutely buy a "challenged" property with an FHA loan. Research the "FHA 203k" loan. That is the specific type of FHA loan that you can use for renovation purposes.

Originally posted by @Andrew Postell :

@Joe Mende ah, yes, this is a common problem. But there are FHA "renovation" loans that are available to you. They are more complicated though but you can absolutely buy a "challenged" property with an FHA loan. Research the "FHA 203k" loan. That is the specific type of FHA loan that you can use for renovation purposes.

Yea, I’ve read all about them.  It was just tough because I was only approved for so much, so it really limited my options. 

In case this isn’t obvious, it wasn’t to me haha, you can only do one FHA of any type at one time. So if you managed to use a FHA 203k loan on one property you can’t use a FHA 203b on the next. 203b is the first time home buyers program I believe.

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