When it comes time to get an FHA loan, most lenders are going to tell you that FHA will generally not insure more than one principal residence for any one borrower. They will tell you this because FHA financing is not allowed for second homes or investment properties, except for FHA to FHA Streamline Refinances without an Appraisal.
FHA will not insure a mortgage if they conclude that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will be the only property owned using FHA mortgage insurance.
That said, there are a few exceptions to the FHA rules and here is a brief explanation of a few possible situations where it may be possible to have more than one FHA loan.
A borrower may be eligible to obtain another FHA mortgage without being required to sell an existing FHA property, if the borrower is relocating, and establishing residency in an area not within reasonable commuting distance from the current principal residence.
If the borrower subsequently returns to the area where he/she owns a property with an FHA mortgage, he/she is not required to re-establish primary residence in that property in order to be eligible for another FHA mortgage. NOTE: The relocation need not be employer mandated to qualify for this exception.
Increase in Family Size
A borrower may be eligible for another home with an FHA mortgage if the number of legal dependents increases to the point that the present house no longer meets the family needs. In order to qualify for this, a borrower must provide satisfactory evidence of the increase in dependents and the property’s failure to meet family needs, and pay down the outstanding FHA mortgage balance on the present property to a 75% or lower LTV ratio.
Vacating a Jointly Owned Property
A borrower may be eligible for another FHA mortgage if the borrower is vacating a residence that will remain occupied by a co-borrower – a quick example of this may be where there is a divorce and the vacating ex- spouse will purchase a new home.
A borrower may be qualified for an FHA mortgage on his/her own principal residence even if he/she is a non-occupying co-borrower with a joint interest in a property being purchased by other family members as a principal residence with an FHA mortgage.
Is it possible to have more than one FHA loan for someone? Only under certain circumstances. Be sure to check with an FHA loan expert who can help you if you find yourself in this situation.
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