June 26, 2023
Many people want to know if they can apply for more than one FHA loan at a time. In some cases this is because the potential borrower wants to buy a home they don’t intend to use as their primary residence.
In others, the issue might be that a larger home is needed due to a change in family size.
Are these reasons for having more than one FHA loan valid under FHA loan rules?
What FHA Loan Rules Say
FHA loan rules for the single-family home loan program in the FHA Single-Family Handbook generally permit FHA loans only for owner-occupiers.
The short answer to the question, “How many FHA loans can I have at the same time?” is ONE. The home must be occupied by at least one person signing the mortgage note.
Furthermore, “FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.”
However, FHA loan rules do permit borrowers to have more than one FHA loan under limited circumstances, including changes in family size that may justify the purchase of a larger home.
Another Option?
Another circumstance that may warrant another FHA home loan (again, handled on a case-by-case basis) is when the borrower has a job issue that requires relocation.
FHA loan rules have addressed this in the past by stating:
“To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower.”
The 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, even if the property to be insured will be the only one owned using FHA mortgage insurance.”
Another reason you might be allowed to apply for a second FHA mortgage? Situations where there was an occupying co-borrower who wants to move out and apply for their own home loan.
Vacating A Residence
“A borrower may be eligible for another FHA-insured mortgage” if the borrower vacates a residence “that will remain occupied by a co-borrower.”
Non-occupying co-borrowers on an existing FHA mortgage may also be eligible for an FHA mortgage if the new home is to be that borrower’s primary residence.
As mentioned previously, all exceptions to the “one borrower, one FHA loan” rules are handled on a case-by-case basis–you will need to work with the lender to determine what is permitted in your circumstances.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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