BluefoxToday blog : Can A Borrower Have More Than One FHA Mortgage At The Same Time

Can A Borrower Have More Than One FHA Mortgage At The Same Time

One of the first questions that existing FHA Borrowers who are interested in purchasing another house is “can they purchase the new house with a second FHA Loan, if they want to keep the first house as an investment and rent it out? The answer is yes under certain circumstances.

First of all FHA does not do investment loans, FHA is a owner occupied loan, meaning that the house must be the Borrower’s Primary Residence, which means that the Borrower must live in the house for the majority of the calendar year.  Further the Borrower must take occupancy of the house within 60 days from the Closing of the loan, and continue to occupy the house for at least one year.

Because FHA is intended to be an owner occupied loan, and to prevent circumvention of the intent of the loan, “FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties”.

Having said that, FHA will allow for exceptions that fall within certain circumstances, in order to determine if the Borrower is eligible for an exception the Underwriter must first take into consideration:

  • The length of time the Borrower owned the previous
  • The circumstances that the Borrower wants purchase another property

Once the Underwriter has taken the above into consideration, an exception may be granted for the following reasons.

  • The Borrower is relocating
  • The Borrower is establishing residency in an area outside reasonable commuting distance from his/her current principal residence

 Note: 

    • If the borrower later returns back to the location of the first house he/she Is not required to re-establish primary residency In that, also 
    • The relocation does not need to be employer mandated to qualify for this exception.
  • The Borrower may be eligible for another home with an FHA-Insured mortgage if the number of his/her legal dependents Increases to the point that the present house no longer meets the family's needs
  • The first FHA mortgage has a Loan-To-Value (LTV) of 75% or less, based on the outstanding mortgage balance and a current appraisal
  • The Borrower vacating the property, but the property will continue to be occupied by a Co-Borrower.  Example: A couple is divorcing
  • The Borrower is a Non-Occupying Co-Borrower on a property that he/she purchased with a family member and the property is the principal residence for the other family member

If a Borrower with an Existing FHA Mortgage cannot meet one of the exceptions listed above, then the Borrower MUST:

  •  Pay off the existing FHA Mortgage on the first residence, or
  • Terminated ownership of that residence.

So as you can see there are several ways that a Borrower can have multiple FHA Mortgages at the same time as long as the Borrower meets one of the above exceptions, and is not trying to circumvent the rules in order to purchase an investment property.

 

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Who To Call For Your Mortgage Needs In Connecticut:

George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308  gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage. 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Old Saybrook, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or souto@snet.net

Comment balloon 11 commentsGeorge Souto • September 25 2011 06:58PM

Comments

George, FHA is still a good program for most first time homebuyers, too.  With this added information, I believe that more people will seek out this program for the next move, whether they sell or not.  Every little bit, helps in this crazy market.

Posted by Frances C. Rokicki, Broker-Mentor,CRS (Fran Rokicki Realty, LLC) about 7 years ago

HI George-I didn't know that there were some exceptions to buy another property under FHA financing.  This is great information for the FHA buyer who may qualify for this program.  

Posted by Brenda Mullen, Your San Antonio TX Real Estate Agent!! (RE/MAX Access) about 7 years ago

I didn't know there were exceptions either - this is really good stuff to know.  Thanks!

Posted by Joy Daniels (Joy Daniels Real Estate Group, Ltd.) about 7 years ago

George - I have a client that I am going to send this to, if you don't mind...  they may need you to help them out.  The 75% may get them, but worth a try?

Posted by Dagny Eason, Fairfield County CT, CDPE Homes For Sale and Condo (Dagny's Real Estate) about 7 years ago

Reblogged and sent to my client!  Well done, George!  Thanks!

Posted by Dagny Eason, Fairfield County CT, CDPE Homes For Sale and Condo (Dagny's Real Estate) about 7 years ago

Frances until Fannie and Freddie easy up again, FHA is one of the main options.

Brenda, the exceptions are limited by they do exist as you can see.

Joy, most people do not realize that there are exceptions, so I thought it would be good to post about them.

Dagny, I will let you know if they contact me, and if I was able to do anything for them.  Thank you for the referral and re-blog :)

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) about 7 years ago

Great information to re-blog George...FHA has many options but many lenders may not explore these with their realtor partners like you do!

Posted by Ginny Gorman, Homes for Sale in North Kingstown RI and beyond (RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate) about 7 years ago

George, really good info to post especially since (in my case) I have a lot of people wanting to by a second home for various reasons...I expect that little gold star to pop up any time now!

Posted by Nick T Pappas, Madison & Huntsville Alabama Real Estate Resource (Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Huntsville AL) about 7 years ago

This is definitely very good info-something people might not realize they can even do!

Posted by Debbie Walsh, Hudson Valley NY Real Estate 845.283-3036 (Shahar Management) about 7 years ago

As usual George you have put together a very nice article on FHA loans. There is so much to know about them and you are a great resource.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) about 7 years ago

George,

Despite FHA having tightened its rules in the recent past it still can also be flexible like in this situation. That's good.

Posted by Esko Kiuru about 7 years ago

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