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. But theres a catch: You can only have one at a time unless you meet specific criteria.
Getting an FHA loan can be a great way for many homeowners to purchase their first home. With low down payments and flexible credit requirements, FHA loans open the door to homeownership for millions of Americans. But what if you’ve already purchased a home with an FHA loan – can you get a second one?
The short answer is yes, you can get an FHA loan twice, but there are some caveats. While FHA loans are popular among first-time homebuyers, they are available to anyone who meets the eligibility criteria.
FHA Loan Basics
Before diving into the specifics of getting multiple FHA loans, let’s review some key facts about FHA loans:
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FHA loans are backed by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD).
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They require just a 3.5% down payment, much lower than conventional loans.
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FHA loans can be used to purchase or refinance primary residences
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They have more flexible credit score requirements than conventional loans Many lenders accept scores as low as 500.
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FHA loans require mortgage insurance adding to the monthly costs.
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The property must be owner-occupied as your primary residence.
Can I Have Two FHA Loans at Once?
Generally, you can only have one FHA loan at a time. This is because FHA loans require owner-occupancy. You can only live in one home as your primary residence.
There are a few exceptions where a borrower can have two FHA loans simultaneously:
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Relocating for a new job that is far from your current home. If the new job results in an extreme commute, a second FHA loan may be allowed.
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Getting divorced and vacating a jointly-owned FHA home. The remaining spouse can take over the loan.
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Family size increase making your current FHA home too small. An exception may be granted to purchase a larger primary residence.
Outside of limited exceptions, having two FHA loans at once is prohibited. But what if your first FHA loan is paid off?
Getting a Second FHA Loan After Paying Off the First
If you have paid off your initial FHA loan, you can absolutely get approved for a second one in the future. The FHA does not limit borrowers to just one loan across their lifetime.
However, there are some stipulations:
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You must occupy the new home as your primary residence. FHA loans cannot be used to buy second homes or investment properties.
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You’ll need to make 12 months of on-time payments on your previous FHA loan before getting approved for another. This demonstrates a solid payment history.
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Your debt-to-income ratio must stay below 43% including both mortgage payments if you currently have an FHA loan on another property.
As long as you meet all eligibility criteria, there is no limit to how many FHA loans you can obtain over your lifetime. Responsible use of multiple loans can help buyers move up to larger homes or relocate to new areas.
Tips for Qualifying for a Second FHA Mortgage
When applying for a second round of FHA financing, follow these tips:
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Wait 12 months after your last FHA loan to apply for the next. Make all payments on time.
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Keep your debt-to-income ratio below 43% including both mortgage payments. Pay down other debts.
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Maintain good credit! Having scores above 580 will get the best rates and terms.
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Save up for the 3.5% down payment required. FHA allows gifts but have some of your own cash.
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Use the same FHA lender if you had a good experience the first time. They already have your information.
Adhering to all FHA guidelines carefully will put you in a strong position to be approved for multiple loans over time.
Alternatives to Multiple FHA Loans
Some homeowners may prefer to avoid having multiple government-backed FHA loans. Here are a few alternatives to consider:
Conventional 97 Loan – This option only requires 3% down like an FHA loan, but is backed by private lenders instead of the government. Credit scores need to be at least 660.
VA Loan – Veterans and military members may qualify for no down payment financing from the VA home loan program. Credit scores start around 620.
USDA Loan – For properties in designated rural areas, USDA-backed mortgages offer no down payment options for low to moderate income borrowers.
FHA Streamline Refinance – Current FHA borrowers can refinance into a new FHA loan to get a lower rate or change terms without requiring appraisals or income verification.
The Bottom Line
While you can only have one FHA loan at a time, you can absolutely get approved for multiple FHA loans over your lifetime. There is no limit if you follow the program guidelines. Pay off your existing FHA mortgage before applying for the next.
Responsible use of the FHA loan program provides flexible low down payment financing to purchase primary residences. First-time buyers, repeat buyers, and even current FHA borrowers can all benefit from this helpful government-backed mortgage option.
Can You Get an FHA Loan More Than Once?
You can get multiple FHA loans in your lifetime. But while you dont need to be a first-time homebuyer to qualify, generally speaking, you can only have one FHA loan at a time. This prevents potential borrowers from using the loan program to buy investment properties.
However, you may qualify for an additional FHA loan without selling or paying off your current property under the following circumstances:
- Youre relocating to an area thats beyond reasonable commuting distance to your current residence or where affordable rental housing is not available.
- Youre leaving a jointly owned property to buy a home, and the co-owner plans to remain in the home (such as in a divorce).
- You cosigned an FHA loan for someone else and now want to purchase your own home.
If you want to purchase another home with an FHA loan to accommodate your growing family, youll need to provide evidence of the increase in dependents and your current homes failure to meet your needs. You will also need at least 25% in equity in your current home to be eligible; if youre not there yet, youll 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.
Are you ready to apply for an FHA loan? Even if you already have an FHA loan, its a good idea to run through the loan requirements before applying for a new one.
- Down payment and credit score: Your required down payment will depend on where your score falls. You can put as little as 3.5% down on an FHA loan if your credit score is 580 or higher. Youll need a downpayment of 10% if your credit score is between 500 and 570.
- Debt-to-income ratio (DTI): Your DTI is the total of your monthly debt payments as a percentage of your monthly gross income. To qualify for an FHA loan, your DTI should be under 43%. To illustrate, lets say the monthly mortgage payment on the home youre considering would be $1,500 and your gross monthly income is $5,000. The amount of your other monthly debt obligations cannot be higher than $650. That said, you may be able to get approved with a DTI of up to 50% if the loan does not pose an elevated risk to the lender.
- Mortgage insurance: FHA loans require you to pay mortgage insurance, which is divided into two types of payments. You will be charged a flat fee of 1.75% of the loan amount at the time of closing, which can be rolled into your loan if you dont have the cash on hand. A monthly charge will also be tacked on to the mortgage payments to cover mortgage insurance for the life of the loan. This payment is also a percentage of the loan amount and is determined by the loan size, term and loan-to-value ratio (LTV).
- Other criteria: The lender will request your Social Security number and proof of income and assets to determine how much home you can comfortably afford. You should also be clear of any foreclosures for at least three years to qualify for an FHA loan.
Keep in mind that these are just general qualifying criteria. Some FHA-approved lenders have stricter requirements for potential borrowers. Its best to speak with a loan officer to get a better idea of their FHA loan requirements.
Can I Get an FHA Loan Twice
FAQ
How many times can you get an FHA loan?
Can you have 2 FHA home loans at the same time?
Can you get a second mortgage if you have an FHA loan?
Can you get another FHA loan if you sold your house?
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 use an FHA loan more than one?
Yes, you will be able to use an FHA loan more than one. Just because you bought a home with FHA loan in the past, it doesn’t mean you can’t qualify for an FHA loan the second time. Once the previous home loan is paid off, you will be able to apply for another one.
Can I refinance more than one home with FHA financing?
You can have multiple FHA loans at the same time, but at least one of the homes must be your primary residence. Any other homes with FHA loans must be refinanced as investment properties. You may be able to get a new FHA loan on an FHA-financed home you’ve since converted to an investment property, with the following restrictions:
Can you get a second FHA loan?
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. But there’s a catch: You can only have one at a time unless you meet specific criteria. Can You Get an FHA Loan More Than Once? You can get multiple FHA loans in your lifetime.