Keller, TX · Member since 2015 · 28 posts · 4 votes
I plan on purchasing my first property around May 2016. Going to use FHA loan to fund potential duplexes. I'm familiar with the basics of FHA loans in regards to investments properties, but wanted to know how easy or difficult it would be to fund a 2nd property in the same year or the next following year.
I'm trying to come up with a 5 year plan on purchasing properties through any possible vehicles (loans, investors, etc). Have a good credit, about 12% debt using the 28% gross rule, and an annual salary of around 75K. (i also just became a license real estate sale agent"inactive license")
Any recommendation or advice on a process that would be good to transition for purchasing a second property would be great!
FHA is for a primary only. Yes, up to 4 units, only under extenuating circumstances can you get a second FHA loan.
The only circumstances in which a borrower with an existing FHA insured loan for a principal residence may obtain another FHA insured mortgage on a new principal residence.
Relocation -A borrower may be eligible to obtain another FHA-insured mortgage without being required to sell an existing property covered by an FHA-insured mortgage if the borrower is:
Relocating or has relocated for an employment related reason, and
Establishing or has established a new principal residence in an area more than 100 miles from the borrower’s current primary residence.
If the borrower moves back to the original area, the borrower is not required to live in the original house and may obtain a new FHA-insured mortgage on a new principal residence. As long as the relocation meets the two requirements above.
Increase in Family Size - A borrower may be eligible for another house with an FHA-insured mortgage if the borrower provides satisfactory evidence that
The has had in increase in legal dependents and the property now fails to meet the family’s needs; and
The loan-to-value (LTV) ratio on the current principal residence is equal to or less than 75% or is paid down to that amount, determined by comparing the outstanding mortgage balance to a current residential appraisal.
Vacating a jointly-owned Property - A borrower may be eligible for another FHA-insured mortgage if the borrower is vacating (with no intent to return such as divorce, legal separation, etc...) the principal residence which will remain occupied by the existing co-borrower.
Non-occupying Co-borrower - A non-occupying co-borrower on an existing FHA-insured mortgage may qualify for an FHA-insured mortgage on a new property to be their own primary residence.
Please see my other post for more information on obtaining an FHA Mortgage.
@Daniel Alexander, 2x FHA loans in the same year? Good luck with that!
You do realize that every time you apply for a new property via FHA loan, you have to move into that property for at least a year, right? (Unless my reading of it is completely out of whack). FHA loan = for Primary Residence!
But yes, it can be for up to four units in the SAME building! THAT'S how you use those loans effectively! [Not official loan advice]...
FHA is for a primary only. Yes, up to 4 units, only under extenuating circumstances can you get a second FHA loan.
The only circumstances in which a borrower with an existing FHA insured loan for a principal residence may obtain another FHA insured mortgage on a new principal residence.
Relocation -A borrower may be eligible to obtain another FHA-insured mortgage without being required to sell an existing property covered by an FHA-insured mortgage if the borrower is:
Relocating or has relocated for an employment related reason, and
Establishing or has established a new principal residence in an area more than 100 miles from the borrower’s current primary residence.
If the borrower moves back to the original area, the borrower is not required to live in the original house and may obtain a new FHA-insured mortgage on a new principal residence. As long as the relocation meets the two requirements above.
Increase in Family Size - A borrower may be eligible for another house with an FHA-insured mortgage if the borrower provides satisfactory evidence that
The has had in increase in legal dependents and the property now fails to meet the family’s needs; and
The loan-to-value (LTV) ratio on the current principal residence is equal to or less than 75% or is paid down to that amount, determined by comparing the outstanding mortgage balance to a current residential appraisal.
Vacating a jointly-owned Property - A borrower may be eligible for another FHA-insured mortgage if the borrower is vacating (with no intent to return such as divorce, legal separation, etc...) the principal residence which will remain occupied by the existing co-borrower.
Non-occupying Co-borrower - A non-occupying co-borrower on an existing FHA-insured mortgage may qualify for an FHA-insured mortgage on a new property to be their own primary residence.
Please see my other post for more information on obtaining an FHA Mortgage.
Primary properties whether VA, FHA, Conventional 5% all require 12 months to live in them. Another option is conventional 20-25% as investment loans for houses that will be rentals.
Thank you all for your responses. Sorry but i wasn't as clear on my question. I am aware that i can only use a FHA loan once as a primary residence and also with the intent to not use as an investment property (unless i go the home hacking route).
When posted the question, I was more concerned with how easy/difficult it would be to secure conventional loans after having multiple mortgages. After doing some research i got my answer! Thanks a lot for the input and advice!
Thank you all for your responses. Sorry but i wasn't as clear on my question. I am aware that i can only use a FHA loan once as a primary residence and also with the intent to not use as an investment property (unless i go the home hacking route).
When posted the question, I was more concerned with how easy/difficult it would be to secure conventional loans after having multiple mortgages. After doing some research i got my answer! Thanks a lot for the input and advice!
Buy a 2-4 unit multifamily using an FHA loan, After a year you should have no problem qualifying for a condo or single family residence using FHA because the lenders see it as a step up, it also would help if you had an increase in legal dependents. With current conventional programs you could actually get the second property using a 3% down conventional loan which saves you half a point on the down payment and FHA related cost. Out of curiosity, what are the 2 and 4 units going for in your area. I am researching my out of state investing options.
Thanks @Clarence Johnson! Very good information to know. An average 2-4 unit condo in the fort worth area is around 240K based on my research.
I assume you mean duplex - quadplex? I strongly advise against buying condos for investment purposes (though like anything, they will work if bought cheap enough), b/c of the HOA fees and lack of control over your property.