Can I Get a Second FHA Loan?

The Federal Housing Administration (FHA) loan program makes homeownership more accessible for many buyers. FHA loans require lower down payments and have more flexible credit requirements than conventional loans. However, the FHA places limits on these government-backed mortgages to prevent misuse. While you can get multiple FHA loans throughout your lifetime you usually can only have one at a time.

FHA Loan Overview

An FHA loan is a mortgage insured by the Federal Housing Administration. Key features include:

Low Down Payments – You can qualify for an FHA loan with a down payment as low as 3.5% of the purchase price if your credit score is 580 or above.
Lenient Credit Requirements – FHA loans are available to borrowers with credit scores as low as 500 Many conventional loans require scores of 620 or higher
Mortgage Insurance – FHA loans require you to pay mortgage insurance premiums for the life of the loan to protect the lender from default.

Why FHA Limits Multiple Loans

The FHA insures loans to help low-to-moderate income and credit-challenged borrowers become homeowners. However, they don’t want the program abused by investors using it to buy multiple rental properties.

Therefore, the FHA restricts borrowers to one FHA-insured mortgage at a time in most cases. You can apply for multiple FHA loans over your lifetime, but you usually must pay off your current FHA loan before getting approved for another.

When You Can Get an Additional FHA Loan

Certain exceptions allow you to take out a second FHA loan while still holding your current one. But you’ll need to meet eligibility requirements. Situations qualifying you for two concurrent FHA loans include:

Relocating for a job if commuting from your current home is unreasonable.
Divorce when vacating a jointly-owned home.
Your family size increased and your current property no longer meets your needs.
You co-signed an FHA loan and now want to buy your own home.

You’ll also need at least 25% equity in your current home, or pay down the loan until you reach 25% equity. And your total monthly debts, including both mortgages, must stay under 43% of your gross monthly income.

Steps to Getting a Second FHA Mortgage

Follow these key steps when seeking another FHA mortgage:

Check your eligibility – Confirm you meet one of the exception criteria allowing two concurrent FHA loans.
Review lender rules – FHA requirements provide minimum standards. Your lender may have overlaying rules that are more stringent.
Check your credit score – You’ll need a score of at least 580 for the lowest down payment. Review your credit reports and address any issues beforehand.
Document your situation – Get evidence showing your reason for needing another FHA loan, like a job transfer letter, divorce decree, or proof of expanding family size.
Calculate your DTI – Make sure your total monthly debt payments after adding the second mortgage stay under 43% of your gross monthly income.
Save for down payment – Have at least 3.5% of the purchase price plus closing costs for the new property. More if your credit score is below 580.
Apply for the mortgage – Find a lender that offers FHA loans and submit a complete application with all required documentation.

Alternatives to Multiple FHA Loans

If getting approved for two FHA loans at once seems difficult or unaffordable, consider these options instead:

Take out a conventional or other type of mortgage for your second home.
Pay off your existing FHA loan before applying for the second mortgage.
Wait to buy another home until you can sell your current property first.
Refinance your FHA loan and take cash out toward the second home’s down payment.
See if you qualify to remove your ex’s name from the current FHA loan through a deed-in-lieu of foreclosure.
Add your name to the title of your current home if you only co-signed an FHA loan for someone else.

The Bottom Line

Qualifying for concurrent FHA loans is possible but uncommon. Most borrowers need to satisfy an exception like relocating for work or getting divorced. And second FHA loan approval still depends on meeting credit, income, and equity requirements.

If buying another home now is crucial, but qualifying for two FHA mortgages seems unlikely, consider alternative mortgage products or options letting you pay off your current loan first. Discuss your specific situation and goals with a loan officer to map out the best route to homeownership.

Eligibility requirements for more than one FHA loanHow many FHA loans can you have? If you meet the above-mentioned criteria for multiple FHA loans, the next step is to meet the eligibility requirements of obtaining more than one FHA loan at once. Credit score. Lenders use your credit score and down payment to determine eligibility. Down payment. According to the credit bureau Experian, a homebuyer can put as little as 5% down on an FHA loan if their credit score is 580 or higher. Homebuyers with a credit score between 500 and 570 will need a down payment of 10%. Debt-to-income ratio (DTI). DTI compares your debt to how much you earn. Lenders uses this ratio to determine a borrower’s ability to repay a mortgage loan. To calculate your DTI, add all your monthly expenses (debt payments) and divide that number by your gross monthly income (before taxes). A DTI of less than 43% is required. Other requirements. All borrowers will need to show proof of employment and income, a social security number, and other documents.

Sell your current home. If you already own a home, it’s likely that the value has increased since you purchased it. Selling your home could result in a profit that you can use to purchase your next home using a conventional mortgage loan.
Refinance your current FHA loan. Refinancing to a conventional loan would make it possible to eventually reapply for an FHA loan on a new primary residence in the future.
Apply for a conventional mortgage. If you’re a first-time homebuyer you may qualify for a conventional mortgage loan as long as you meet the lender’s credit score and DTI requirements.
Apply for a VA or USDA Loan. VA loans are only for U.S. military veterans and USDA loans are specifically for the purchase of properties that are in certain geographic areas. These types of loans are government programs that have flexible lending requirements, making it easier to qualify.

How many FHA loans can you have?

You’re relocating for a new job and need a new primary residence.
The new home is more than 100 miles away from your current FHA-financed home.
Youre getting a divorce and you intend to purchase a new home in your name only.
Your family is growing and you can provide evidence of additional legal dependents.
You were a co-signer for your current FHA loan. If you are a co-signer on a family member’s FHA mortgage you may apply for an FHA mortgage on your own home purchase.

How to get TWO FHA Loans at the Same Time

FAQ

How long do you have to wait to apply for a second FHA loan?

You will also need at least 25% in equity in your current home to be eligible; if you’re not there yet, you’ll need to pay down the loan balance until you reach 25% in equity to qualify. As long as you meet one of these exceptions, there is no required waiting period between FHA loans.

What is the downside of an FHA loan?

FHA loans require borrowers to pay mortgage insurance premiums (MIPs) at closing and throughout the life of the loan. Specifically, you’ll pay 1.75% of the loan amount at closing as your upfront MIP. Then, you’ll pay MIPs of 0.15% to 0.75% of the loan amount every year.

Can you have an FHA loan and a conventional loan at the same time?

You are generally limited to buying primary homes with FHA loans and you can have only one FHA loan at a time. With conventional loans, you can buy primary homes, vacation homes, rental homes, and investment properties and you can have as many conventional loans as your lender will approve.

Can I get a second FHA loan to buy a new home?

An FHA loan is a type of mortgage that is backed by the federal government. It can help buyers with limited cash reserves and lower credit scores achieve the dream of homeownership. If you have an existing FHA loan, you may wonder if you can get a second FHA loan to buy a new home. There is no limit to how many times a borrower can get an FHA loan.

Can I take out a second FHA loan?

Some exceptions may qualify you to take out a second FHA loan before selling your current home or paying off your existing FHA loan. Keep in mind that taking out two FHA loans means two mortgage payments every month. Make sure you can afford a second monthly mortgage payment.

Can you get two FHA loans at the same time?

Sell your current home. You can use the proceeds from selling your home to pay off your original FHA loan before you apply for an additional FHA mortgage. While you can qualify for two FHA mortgages at once, that’s the exception to the FHA loan rule. In most cases, you can’t have two FHA loans at the same time.

Can I get a second FHA loan if my family grows?

You can qualify for an additional FHA mortgage if your family has grown and your current home no longer meets the family’s needs. To qualify, you must submit evidence your family has increased in size, and your existing home is too small. You’ll also need at least 25% equity in your home to qualify for a second FHA loan.