November 6, 2020
One common question about FHA home loans goes something like this: “I bought a home with an FHA mortgage–can I get an FHA loan more than once?”
The question is one of many that indicate a series of persistent myths about FHA mortgages. Those myths include the mistaken belief that FHA loans are only for economically disadvantaged people, or that there are restrictions on FHA mortgages that include income caps or that there must be a demonstration of need to be approved for an FHA mortgage.
This might be due to confusion about government-backed loans in general. For example, certain USDA mortgage loans DO require a demonstration of need, income caps per household, and other features that clearly indicate that those USDA loans ARE for those who qualify as low or moderate income borrowers.
But FHA mortgages are NOT need-based loans, are not restricted to first-time home buyers, and most important of all in terms of answering the question in our headline? FHA mortgages allow a borrower who has owned a home before in any context to apply for an FHA mortgage to buy a new home.
What’s the catch? FHA mortgages require occupancy in most cases and if you want to buy a home that is NOT intended as your primary residence, you won’t be able to use the FHA Single Family loan program to buy it.
Vacation homes, “second homes” that aren’t the primary residence, business interests, and other non-residential mortgage loan purchases don’t qualify under the FHA Single-Family loan program.
FHA home loans can be used to purchase a primarily residential property up to four units that you intend to live in as your home address. You can have a new FHA loan even if you had an FHA mortgage in the past. In most cases you cannot have two FHA mortgages at once, though there are certain exceptions.
Those exceptions can include changes in family size, and work-required relocation among others–you’ll need to contact a lender to see what is possible in your specific circumstances.
FHA refinance loans are possible, too–for both existing FHA loans and non-FHA mortgages alike. When you refinance, you are paying off the old mortgage and starting a new loan, so the rules about “two FHA mortgages” at once aren’t applicable here.
Refinancing can help you get into a lower interest rate, a lower payment, or out of an adjustable rate mortgage and into a more predictable fixed-rate loan.
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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