Can you have two FHA loans at once?

Question

I house hacked my duplex with an FHA loan. My fiancee and I want another rental to expand our portfolio. We are willing to house hack again. Would I qualify for another FHA loan if my first property is not entirely paid off yet? We have lived in this property for over two years.

-Alex R. Buffalo NY

Russell Brazil · Answer

No

Alexander Rotolo · Answer

@Michael K Gallagher That makes sense, thanks!

Alexander Rotolo · Answer

@Michael K Gallagher That sounds like a reasonable idea. I'm talking to a mortgage broker this week about refinancing options. I wonder if switching it to a conventional loan might solve that problem.

Michael K Gallagher · Answer

@Alexander Rotolo I think it would. You would just have to do the math on it. I know, at least from the brokers I've dealt with, that to get a duplex conventionally you have to put 20% down, or in other words they will only give you a loan for 80% of the appraised value of the property. So if what you owe on the duplex is 80% or even lower, than the appraised value of the duplex, then you would have to bring very little if anything to closing.

Another point worth mentioning is that you could keep your current FHA mortgage on the duplex, and go buy a single family, because if you are going to claim occupancy of the single family you only need to put 5% down. Again it would depend if going to a single family and renting both sides of the duplex would put you in a good position month to month on financials, but that is another option if you are just looking to move on and rent both sides out. But I will say getting the duplex refinanced to a conventional loan gets rid of your PMI....and that is just money back in your pocket...so its worth doing it eventually even if you can't swing the numbers in the immediate future.

Michael K Gallagher · Answer

@Alexander Rotolo My understanding is no you would not. You could however, refinance your current property into a conventional loan, then go get another FHA loan. I am in a similar situation you are where I have an FHA on my duplex, and our plan is to use the appreciation + our loan pay-down to basically come up with that 80% LTV ratio that is high enough for us to refi into a conventional loan. I am not too familiar with the rules surrounding it, but because you and your fiance are not married yet I've heard of couples using that to their advantage to each get their own FHA loan individually.

Perhaps you keep the current FHA on the duplex, and whoever's name is not on the deed for the duplex then gets an FHA loan for a single family. You move into the single family and then rent both sides of the duplex. You'd obviously have to run the numbers to see if you come out ahead in that scenario, but thats probably the only way to get a second FHA without refinancing the first.

Can you have two FHA loans at once?

Can you have two FHA loans at once?

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