Can You Get Another FHA Loan? Everything You Need to Know

The FHA loan program allows buyers to purchase a home with just a 3.5% down payment. This makes homeownership more accessible for those who can’t afford a large down payment. But can you get another FHA loan if you already have one?

The short answer is yes, you can get multiple FHA loans throughout your lifetime. However, there are restrictions on having more than one FHA loan at the same time. Let’s take a closer look at the details.

How Many FHA Loans Can You Have at Once?

While there’s no limit to the number of FHA loans you can get over your lifetime, you typically can only have one FHA loan at a time. This is because FHA loans are intended for owner-occupied primary residences.

Having more than one FHA loan simultaneously could indicate you’re using the program to buy investment properties The FHA aims to prevent this in order to keep the loan program available for eligible homebuyers.

There are a few exceptions where you may qualify for a second FHA loan:

• You are relocating for a job and need to buy a new primary residence more than 100 miles away.
• Your family is growing and you need a larger home. You’ll need at least 25% equity in your current home.
• You are getting divorced and your spouse will remain in the current FHA-financed home.
• You previously co-signed an FHA loan for someone else, and now want to buy your own home.
• You are purchasing a HUD-owned property that was previously foreclosed on.

As long as you meet one of these exceptions, there is no waiting period required between FHA loans.

FHA Refinancing Rules

When it comes to refinancing, you can have multiple FHA refinance loans as long as at least one property is your primary residence.

For example, you could refinance your current primary home with an FHA streamline refinance. And you could potentially refinance a rental property or second home you already own with an FHA cash-out refinance.

However, there are restrictions in this case:

• The rental or second home must be refinanced as an investment property.
• You can’t do a cash-out refi or adjustable rate mortgage on the rental/second home.
• Your primary residence would need to be refinanced through FHA streamline, which doesn’t require an appraisal.

Meeting FHA Qualifications

Even if you meet one of the exceptions for a second FHA loan, you still must meet the qualification requirements:

• Credit score: At least 580 for 3.5% down, or 500-579 for 10% down
• Debt-to-income ratio: Below 43%
• Down payment: 3.5% or 10% depending on credit score
• Occupancy: At least one property must be owner-occupied primary residence
• Mortgage insurance: Required on all FHA loans

You’ll also need to provide documentation to confirm your eligibility for a second loan, such as:

• Proof of new employment if relocating
• Evidence of family size increase if needing a larger home
• Divorce decree showing spouse is retaining current home
• Rental income documentation for keeping current property as rental

Meeting these requirements indicates you have the financial capacity and need for a second FHA mortgage.

Alternatives to Multiple FHA Loans

If you don’t qualify for a second FHA loan, there may still be alternatives for low down payment financing:

• Fannie Mae HomeReady: 3% down for low-income borrowers, 620+ credit score
• Freddie Mac Home Possible: 3% down, 660+ credit score
• VA loans: No down payment for eligible military borrowers
• USDA loans: No down payment for low-income buyers in rural areas

These programs can provide options if you need another low down payment mortgage but exceed FHA limits.

Tips for Getting Another FHA Loan

If you need another FHA loan, keep these tips in mind:

• Check your eligibility. Review the exceptions and ensure you qualify for a second loan.
• Know the requirements. Understand the minimum FHA credit score, down payment, and debt-to-income ratios.
• Document your situation. Provide all necessary paperwork to verify your need and eligibility.
• Consider alternatives. If you don’t qualify for FHA, look into other low down payment programs.
• Compare mortgage lenders. Shop around with a few lenders to find the best rates and fees.
• Improve your credit. If needed, take steps to boost your credit before applying to meet requirements.

With proper planning and preparation, you can determine if getting another FHA loan is right for your situation. While restrictions apply, FHA does make it possible in certain circumstances.

Frequently Asked Questions

Can you get an FHA loan after a foreclosure?

Yes, but you must wait 3 years after the foreclosure before getting a new FHA loan.

Can you buy investment properties with an FHA loan?

Yes, but you must live in one property as your primary residence and put down at least 25% on any investment properties.

Do FHA loans have a maximum amount?

Yes, FHA loans have county-specific loan limits that cap the maximum amount you can borrow. These limits vary but typically range from $420,000 to over $800,000.

How many times can you refinance an FHA loan?

There is no limit on how many times you can refinance an FHA loan. However, refinancing frequently usually doesn’t make financial sense due to closing costs.

Can I remove PMI from my FHA loan?

Yes, you can request PMI removal once you reach 22% equity either through appreciation or extra payments. FHA PMI drops off automatically once you hit 78% loan-to-value.

Getting approved for another FHA loan is possible if you meet eligibility requirements. Review the rules and work with a lender to see if it could be a good option for your situation.