October 20, 2017
How many times in my life can I get an FHA loan? If you are buying your first home, this is a question you might not ask until later. But it’s a good idea to know what your options are should you need to sell your first home later and begin a new house hunt.
Understanding FHA Loans
Knowing that FHA home loans are intended for owner-occupiers who want to use their property as their home address and primary residence helps a lot when trying to understand FHA loan rules. If you don’t plan to use the property you want to buy as your home, you won’t be able to use an FHA single-family home loan to purchase it.
There are certain exceptions for government agencies and non-profit groups, but a typical buyer should be aware that the occupancy rules will definitely apply for their FHA mortgages.
FHA Loan Rules: First Time Buyers Only?
FHA loans are not strictly intended for first-time home buyers. That means that you can buy a home using an FHA loan if you are financially qualified, even if you have purchased a home or land before. It also means that you can have other investment property in your name and still qualify for an FHA mortgage, as long as you intend to use the property you buy with the FHA loan as your home.
How Many FHA Loans Can I Have At The Same Time?
In general, FHA loan rules are designed for borrowers to have one FHA mortgage at a time, and to allow borrowers to refinance an existing mortgage to a new FHA loan. In most cases a borrower cannot have two FHA loans at once, with certain exceptions made for extenuating circumstances.
Those circumstances include job relocations, changes in family size, and situations where a co-borrower vacates the property with an existing FHA mortgage loan to purchase a home of their own.
The rules for these transactions are specific, as we’ll examine below. Consider the FHA loan rules for a second FHA mortgage due to a job relocation. According to HUD 4000.1:
“A Borrower may be eligible to obtain another FHA-insured Mortgage without being required to sell an existing Property covered by an FHA-insured Mortgage if the Borrower is:
-relocating or has relocated for an employment-related reason; and
-establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower’s current Principal Residence.
If the Borrower moves back to the original area, the Borrower is not required to live in the original house and may obtain a new FHA-insured Mortgage on a new Principal Residence, provided the relocation meets the two requirements above.”
You will need to discuss your FHA mortgage loan needs with a loan officer to see if your circumstances qualify in such cases. Additional lender standards and other rules may apply above and beyond what is written in HUD 4000.1.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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