5 min read fha

Can I have more than one FHA mortgage?

Can I have more than one FHA mortgage?

Short Answer:

Probably not. Typically, FHA allows borrowers to have one FHA mortgage at the same time. However, there are some narrow exceptions.

Longer Answer:

The Federal Housing Administration (FHA) mortgage program is a popular choice for many homebuyers due to its low down payment requirements, flat mortgage insurance and flexible credit and income rules. One of the most common questions that I get from borrowers is "can I have more than one active FHA mortgage?" The answer is probably not, but there are some exceptions to this rule.

Understanding FHA's Primary Residence Requirement

The FHA mortgage program is designed to help individuals purchase principal residences, not investment properties or second homes. FHA defines a "principal residence" as " a property that will be occipied by the borrower for the majority of the caendar year." As a result, FHA guidelines typically restrict borrowers to one FHA mortgage at a time. This rule ensures that the program's benefits meet the goal of FHA to help primary residence homeownership.

Exceptions to the One-FHA-Mortgage Rule

While the general rule is that you can only have one FHA mortgage at a time, there are several exceptions where you might be allowed to have more than one:

  1. Relocation for Employment
    • Scenario: If you are relocating for a new job that is not within a reasonable commuting distance from your current home, you may be eligible for a second FHA mortgage.
    • Requirements: You must provide documentation of the job relocation and demonstrate that the new job is too far to commute from your current residence. While FHA does not define "reasonable community distance," the mortgage industry has used 100 miles as a benchmark.
  2. Increase in Family Size
    • Scenario: If your current home no longer meets the needs of your growing family, you may qualify for a second FHA mortgage.
    • Requirements: You must provide evidence of the increase in family size (e.g., birth certificates) and show that your current home is insufficient for your family's needs. In addition, FHA requires you to have 25% equity in your current home to move foward (an appraisal on the department residence may be required).
  3. Vacating a Jointly Owned Property Due to Divorce/Seperation
    • Scenario: If you are vacating a property that you co-own with another person (such as a spouse or partner) due to a divorce or separation, you may be eligible for a second FHA mortgage.
    • Requirements: You must provide legal documentation of the separation or divorce and demonstrate that you will no longer reside in the jointly owned property.
  4. Non-Occupying Co-Borrower
    • Scenario: If you are a non-occupying co-borrower on an existing FHA loan (e.g., you co-signed for a family member), you may still be eligible for your own FHA mortgage.
    • Requirements: You must prove that you are not residing in the property associated with the existing FHA loan.

Important Considerations

  • Occupancy Requirements: Even if you qualify for a second FHA mortgage under one of the exceptions, you must still meet the occupancy requirements. This means you must intend to occupy the new property as your primary residence.
  • Credit and Financial Requirements: You must still meet the FHA's credit and financial requirements for the new mortgage. This includes having a sufficient credit score, stable income, and the ability to make the required down payment with the existing mortgage plus any HOA or condo fee from the department residence.
  • Rental Income from Departing Residence: FHA only allows rental income from the departing residence, if the new house is 100 miles away from the old house. If 100 miles away, a one year lease will be required and borrower will be credited with 75% of the monthly rental income on said lease.

Conclusion

While the FHA generally restricts borrowers to one mortgage at a time, there are several exceptions that may allow you to obtain a second FHA mortgage. These exceptions include job relocation, an increase in family size, vacating a jointly owned property, being a non-occupying co-borrower, and, in rare cases, obtaining a secondary residence for a family member.

If you would like to see if you qualify for one of these exceptions, please email me at teamjd@mainstreethl.com These blogs are for informational purposes only. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Should you have any questions about the information provided, please contact me.

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