FHA loans can be an advantageous alternative for borrowers who can’t qualify for a conventional mortgage. An FHA loan is a mortgage that is backed by the federal government and has different qualification requirements for borrowers to help them get a home loan.
If you already have an FHA loan, you may be wondering, how many FHA loans can you have? In this article, we will explore multiple FHA loans along with the restrictions and qualifications around them. In addition, we will also take a look at FHA loan requirements to help get you more familiar.
Summary
- Generally, borrowers are limited to one FHA loan at a time unless they meet qualifying circumstances
- There are multiple FHA loan alternatives for borrowers to consider that can help them get an additional mortgage
Can You Get an FHA Loan More Than Once?
FHA guidelines dictate that borrowers can only have one FHA loan at a time unless they meet qualifying circumstances. Generally speaking though, guidelines permit only one FHA loan at a time. You can have multiple FHA loans in your lifetime and you don’t need to be a first-time home buyer to qualify.
Below are the different qualifying circumstances that permit you to have additional FHA loans without having to sell or pay off your existing property.
- Work Relocation – You’re relocating to a place that is too far for you to commute from your current residence or where renting is affordable
- Leaving Jointly Owner Property – If you plan to leave a jointly owned property in order to purchase a new primary residence and the other co-owner remains in the home. This exception is most common with divorce
- Cosigned an FHA Loan – If you cosigned an FHA loan for someone in the past and now plan to purchase your own primary residence
- Growing Family – If you want to buy a new home with another FHA loan to help you accommodate your growing family you can get a second FHA loan. However, you will need to provide proof of the increase in dependents via your tax returns along with birth certificates. In addition, you will also need to prove that your current home size fails to meet your growing family’s needs. Lastly, borrowers will also need to have at least 25% equity in their home to be eligible.
As you can see, the qualifying circumstances are very niche and can make it difficult for you to get a secondary FHA loan. However, if you do qualify you can get a second FHA loan. As a borrower, it’s also important to become familiar with the FHA flip rule when planning to purchase a home using an FHA loan.
FHA Loan Requirements
If you’re planning to finance a home using an FHA loan, it’s important that you become familiar with how they work and the underlying requirements. The requirements are different than those of conventional mortgages and can be advantageous for lower-income borrowers. Let’s take a look at the FHA loan requirements below in more detail.
- FICO score at least 580 = 3.5% down payment
- FICO score between 500 and 579 = 10% down payment
- Mortgage insurance is required
- DTI of less than 43%
- The home must be the borrower’s primary residence
- The borrower must be employed and have a steady income
FHA loans are mortgages that are insured by the Federal Housing Administration. They are alternative loan products to help borrowers with lower incomes and fewer cash reserves qualify for a home.
Can You Get an FHA Loan Twice?
Borrowers can have multiple FHA loans in their lifetime. Contrary to popular belief you don’t have to be a first-time homebuyer to get an FHA loan. It’s also important to note that if you have had previous cases of foreclosures you will have to wait 3 years to qualify for another FHA loan.
FHA Restrictions
It’s important to be aware of the limits and restrictions associated with FHA loans. Not every type of property is eligible for an FHA loan. Let’s take a look at the restrictions below.
- The property has to be a primary residence, investment properties and second homes are not permitted
- The borrower must occupy the residence within 60 days of the closing
- The home has to be appraised by an FHA-approved appraiser
- The property must meet the minimum property standards outlined by the FHA
- FHA loan limits are up to $970,800 for 2022 for high-cost areas
- FHA loan limits will vary based on country property values
Important Note: If you want to get an FHA loan for a house that needs some rehab, but you still plan on having it as your primary residence, an FHA 203(k) rehab loan is a great option to consider.
Can You have a Conventional Mortgage and an FHA Loan at the Same Time?
Borrowers can have a conventional mortgage and an FHA loan if they meet the requirements for both loans. It’s not uncommon for borrowers to purchase a primary residence with an FHA loan and have a conventional mortgage for second home or an investment property.
Recommended Reading: Conventional Loan vs FHA – What are the Differences and Features?
If you’re thinking about getting a conventional loan in addition to your current FHA loan, it’s important to be aware of the different requirements.
Multiple FHA Loan Alternatives
If you don’t want to hold two FHA loans at the same time, there are other loan alternatives to consider. As a borrower, you have several options such as:
- Selling your existing property
- Get a home equity conversion mortgage
- Refinance your existing property with a conventional mortgage
- Buy a new property with a different loan type
- Pull equity out of your home with a HELOC
FAQ’s
What is the FHA 100 mile Rule?
The FHA 100 mile rule gives buyers the right to retain their FHA loan on their prior residence and get another home with an FHA mortgage. The buyer must relocate for job-related reasons.
Can Married Couples Get Two FHA Loans?
This is actually possible. Married couples can have multiple FHA loans if there is a change in family size or relocation due to job requirements.
