Can I Have More Than One FHA Loan at a Time? A Complete Guide

The FHA loan program makes homeownership attainable for many buyers by requiring just 3.5% down and having flexible credit requirements. But can you use multiple FHA loans to purchase investment properties or second homes? Let’s dive into the details on whether you can have more than one FHA mortgage at once.

What is an FHA Loan?

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

• Requires only 3.5% down payment with a minimum 580 credit score
• Available from FHA-approved lenders
• Offers low mortgage insurance rates
• Can be used to purchase or refinance a primary residence

FHA loans expand homebuying opportunities thanks to the low down payment options and lenient credit guidelines. But the FHA does place some restrictions around multiple loans to prevent abuse of the program

FHA Loan Limits

The first requirement is that your FHA loan amount stays under the maximum limit for your county, which ranges from $420,680 to $970,800 in 2023. You can look up the specific cap for your area here. The home’s purchase price must fall at or below the limit to qualify for FHA financing.

How Many FHA Loans Can You Have?

While there is no limit on the total number of FHA loans you can obtain over your lifetime restrictions are in place on how many you can have at one time.

• You can only have one FHA loan at a time in most cases.
• This is because FHA loans must be used to purchase or refinance a primary residence that you live in.

So even if you’ve paid off a previous FHA loan, you typically can’t take out another until you sell the home or refinance into a conventional loan. This prevents investors from exploiting the FHA program to buy multiple rental properties.

When Can You Have Two FHA Loans?

There are some limited scenarios where you may qualify for two FHA mortgages simultaneously:

• Relocating for a job that’s too far from your current home
• Getting divorced and needing to buy a new primary residence
• Family size has increased so current home is too small

You’ll also need enough income to afford both mortgage payments and at least 25% equity in the first home. These exceptions are evaluated case-by-case by lenders.

Outside of specific circumstances, the rules prohibit using FHA financing to buy a second house you won’t live in.

Alternative Loan Options

If you don’t qualify for two FHA loans, here are some other options:

• Conventional loan – Higher credit score and down payment usually required. Make sure you can afford both mortgage payments.
• Wait to buy – Pay off first FHA loan completely before applying for the second. Easier to qualify with just one mortgage payment.
• Sell first home – Use proceeds to pay off initial FHA loan so you only have new mortgage.

You can also tap home equity on current property for down payment on second home through cash-out refinance or home equity loan.

Tips for Applying for Multiple FHA Loans

If seeking two FHA mortgages under permitted circumstances, keep these tips in mind:

• Check credit – Minimum 580 FICO score required on both loans. Fix any errors to boost score.
• Calculate DTI – Keep total debt-to-income under 43% including both mortgage payments.
• Save for down payments – Have 3.5% down payment ready for each FHA loan.
• Show home equity – May need up to 25% equity in first home to qualify for second loan.
• Pick lender carefully – Find an FHA lender experienced with multiple mortgages.

Meeting both FHA loans guidelines demonstrates you can truly afford the two payments.

The Bottom Line

While the FHA doesn’t limit how many loans you can get over your lifetime, you typically can only have one at a time. This restricts using FHA financing to buy investment properties or second homes. But a few exceptions exist if your first home no longer fits your needs. Overall, work closely with your lender if seeking two FHA mortgages at once to ensure you meet all requirements.