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Some homeowners have a change in circumstances which may require them to look for another house. If you have purchased a home with an FHA mortgage, is a second FHA loan possible? Can you own two homes purchased through the FHA Single-Family Home Loan program?

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Can I Buy a Second House With an FHA Mortgage?

February 14, 2022

Can I Buy a Second House With an FHA Mortgage?
Some homeowners have a change in circumstances which may require them to look for another house. If you have purchased a home with an FHA mortgage, is a second FHA loan possible? Can you own two homes purchased through the FHA Single-Family Home Loan program?

The answer depends on your circumstances. FHA loan rules generally do not permit you to have two FHA mortgages at the same time unless the borrower meets certain exceptions, which we will list below.

And aside from the FHA loan guidelines in this area there are the financial factors to consider--credit rating, loan repayment history, and debt-to-income ratio may all play a part in whether a lender is able to approve or deny an FHA loan. 

And if you already have one mortgage, your debt ratio issues may complicate the purchase of the second property depending on circumstances.

As mentioned above, FHA loan rules in HUD 4000.1 state that a borrower is generally allowed to have only one FHA mortgage loan at a time. However, certain exceptions are possible. Those exceptions include the following, as found in 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 Borrowers current Principal Residence.”
Another justification for an exception to FHA policy? Changes in family size. You will need to discuss these issues with a participating lender to see what options are available to you. One thing is clear, however--FHA loan rules do not permit the use of an FHA mortgage for a vacation home, second residence that is not intended as your primary residence, investment properties etc. 

No FHA mortgage can be approved for those types of purchases. FHA mortgages are intended for owner-occupiers.

These rules continue in the FHA Single Family Lender’s Handbook, saying,  “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.”

To qualify for such exceptions to policy, the borrower may be required to provide supporting documentation to help the lender justify the exception.

There are other factors. State law, for example. And the participating lender may have rules that interfere with your purchasing another home with an FHA mortgage--you may need to shop around for the right financial institution.

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