Can I Have More Than One FHA Loan? Everything You Need To Know

The FHA loan program helps make homeownership accessible for many borrowers by offering low down payments and flexible credit requirements But can you get more than one FHA loan? The answer is yes, you can have multiple FHA loans throughout your lifetime if certain conditions are met

In this comprehensive guide, we will cover:

• The basics of FHA loans
• If you can have two FHA loans at the same time
• Exceptions that allow multiple FHA loans
• Meeting lender requirements for extra FHA loans
• Alternatives if you don’t qualify for multiple FHA loans

Let’s dive in!

What Are FHA Loans?

FHA loans are government-insured mortgages backed by the Federal Housing Administration (FHA) They make homebuying more affordable by requiring lower down payments and having more flexible credit standards than conventional loans

Some key features of FHA loans include:

• Down payments as low as 3.5% of the purchase price.
• Minimum credit score requirements of 580.
• Allows non-traditional credit for borrowers with limited credit history.
• Lower monthly mortgage insurance premiums than conventional loans.

To get an FHA loan, the property must be your primary residence – investment properties don’t qualify. The FHA has this owner-occupancy rule to prevent investors from taking advantage of the program’s lenient borrowing terms.

Can You Have Two FHA Loans at The Same Time?

Generally, you can only have one FHA loan at a time since you can only have one primary residence. This restriction helps ensure borrowers use FHA financing responsibly.

However, some special circumstances may allow you to qualify for two FHA loans simultaneously:

• Relocating for a job: If your new job isn’t reasonably close to your current home, you may qualify for a second FHA loan. Lenders typically consider commutes over an hour to be unreasonable.

• Divorce: If leaving a jointly-owned home, you can get another FHA loan for your new primary residence.

• Increased family size: If your current FHA home is now too small due to family growth, you may get another FHA loan. You’ll need documentation proving your family size increased.

• Co-signing: Co-signing an FHA loan for a family member while having your own may be allowed. Remember you’ll be responsible for the co-signed loan if they default.

In these situations, you’ll need enough income to afford both mortgage payments and meet debt-to-income ratio requirements. Having 25% equity in your current home also helps.

How Many FHA Loans Can You Get Over Time?

You can have multiple FHA loans throughout your lifetime after paying off your previous loan. There’s no limit on the number of FHA mortgages you can obtain if you meet eligibility requirements each time.

However, there are timing requirements between loans:

• You must wait 12 months after occupying your previous FHA property before getting another FHA mortgage.

• If you had a foreclosure or bankruptcy, you’ll need to wait 3 years and 2 years respectively before getting another FHA loan.

• Any collections, judgments, or liens against you listed in the CAIVRS system must be resolved first.

As long as you meet these timeframes and other FHA borrowing criteria like a 580+ credit score and debt-to-income ratio below 43%, you can continue getting FHA mortgages repeatedly.

Lender Requirements for Multiple FHA Loans

When applying for more than one FHA loan, lenders will carefully assess:

• Your income – You must have enough income to afford two mortgage payments to avoid an excessive debt-to-income ratio. Most lenders require additional reserves as well.

• Your down payment – You’ll need to fund down payments for each loan, potentially tapping savings. FHA loans need at least 3.5% down.

• Mortgage insurance – Having two FHA loans means paying two sets of mortgage insurance premiums, raising your costs.

Meeting these requirements demonstrates you can responsibly manage multiple FHA mortgages. FHA lenders will scrutinize your application closely.

Alternatives to Getting Multiple FHA Loans

If getting two FHA loans won’t work for you, consider:

• Conventional financing – Conventional mortgages may offer more flexibility for multiple loans, but also require bigger down payments and higher credit scores.

• Paying off your FHA loan first – Finish paying your existing FHA mortgage before applying for a second. This avoids juggling two payments.

• Selling your property – Use proceeds from selling your current FHA home to pay off that loan before getting another FHA mortgage.

Analyze these alternatives to decide if they make more financial sense than pursuing multiple FHA loans.

The Bottom Line

Qualifying for more than one FHA loan is possible if you meet eligibility criteria and have a compelling reason to need two mortgages. Exceptions for things like job relocations or divorce may allow two FHA loans at once.

Over your lifetime, you can have multiple FHA mortgages by fulfilling timelines between loans and proving your income supports multiple payments. Weigh alternatives too if getting multiple FHA loans doesn’t fit your situation.

With strategic planning, FHA financing can provide affordable home financing at different stages of life. Learn the guidelines so you can use the FHA loan program to its full potential.