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Do FHA loan rules permit an FHA borrower get a second FHA home loan? That is a question that’s very important to some-especially those who may be facing job relocation, an increase in family size, or similar issues.

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News and Updates for Homeowners

FHA Loan Rules for Second Home Purchases

FHA Loan Rules for Second Home Purchases
October 15, 2017 - FHA loan rules for the single-family loan program state that FHA mortgages are for owner-occupiers, but depending on circumstances, a borrower may be approved by a participating lender to buy another home--usually in response to a pragmatic need like a larger family or job requirements outside a reasonable commuting distance.

There is a section in the FHA loan rulebook, HUD 4000.1, titled “FHA Requirement for Owner Occupancy” which includes the following:

“FHA will not insure more than one Property as a Principal Residence for any Borrower, except as noted below. 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.”
What are the exceptions for the “single property” rule?

Relocations

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.”

Increase In Family Size

An exception may be approved include increases in family size, or a borrower who is vacating a jointly owned property. In all circumstances that qualify, the application for the new FHA loan is processed on a case-by-case basis, so a borrower will need to work with his or her participating FHA lender to see what is possible. There’s nothing wrong with running your circumstances past a loan officer to see what that financial institution might be willing to do.

Vacating A Jointly-Owned Home

HUD 4000.1 instructs participating lenders, “    A Borrower may be eligible for another FHA-insured Mortgage if the Borrower is vacating (with no intent to return) the Principal Residence which will remain occupied by an existing co-Borrower.”

Non-Occupying Co-Borrower

FHA loan rules permit a non-occupying co-borrower to apply for an FHA home loan of her/his own as long as the new loan is intended to purchase a primary residence.

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