Can I Have Two FHA Loans? What You Need To Know

The FHA loan program allows homebuyers to purchase a home with as little as 3.5% down and flexible credit requirements. This makes FHA loans ideal for first-time homebuyers and buyers with less-than-perfect credit.

But can you have more than one FHA loan at the same time? The short answer is no, with a few exceptions

In this comprehensive guide we’ll cover everything you need to know about having multiple FHA loans including

• What is an FHA loan?
• FHA loan limits
• Can you have two FHA loans?
• Exceptions to having two FHA loans
• Qualifying for two FHA loans
• Alternatives to a second FHA loan
• Refinancing an FHA loan
• Pros and cons of FHA loans

Let’s dive in!

What is an FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD).

Some key features of FHA loans include:

• Low down payment – Only 3.5% down required for those with credit scores of 580 or higher.

• Lenient credit requirements – Minimum credit score between 500-580.

• Low mortgage insurance – An upfront mortgage insurance premium of 1.75% of the loan amount is required, plus an annual fee of 0.45% – 0.85% of the loan amount. This is lower than with conventional loans.

• Fixed interest rates – Interest rates are fixed for the entire loan term, usually 30 years.

• Lower debt-to-income ratio – FHA allows debt-to-income ratios up to 57%, higher than conventional loans.

As you can see, FHA loans offer more flexible underwriting guidelines, making homeownership possible for more buyers.

FHA Loan Limits

The maximum FHA loan amount varies by county but ranges from $420,680 to $970,800 in most areas. High-cost areas like San Francisco and New York City have higher limits.

You can look up the FHA loan limits in your county here.

Can You Have Two FHA Loans?

In general, you cannot have two FHA loans at the same time. The FHA program is intended for owner-occupied primary residences, not investment properties.

However, there are a few exceptions where you may qualify for two FHA loans simultaneously:

• Relocating for a new job – If you need to move to a new area but haven’t sold your current home yet, you may qualify for a second FHA loan.

• Purchasing a new primary residence at least 100 miles away – If your family is growing and you need a larger home, you may be able to take out a second FHA loan.

• Divorce – If you’re divorced and your spouse is awarded your joint home, you may be eligible for a new FHA loan.

• Co-signing on someone else’s FHA loan – You can co-sign on an FHA loan for a family member while having your own.

As you can see, the guidelines for a second simultaneous FHA loan are strict. You’ll need to prove the second home is your new primary residence at least 100 miles away from the first.

Exceptions to Having Two FHA Loans

While rare, here are two additional cases where you may be allowed to have two FHA loans at once:

• Purchasing HUD foreclosure properties – FHA loans can be used to purchase HUD homes that have been foreclosed on. In this case, you aren’t required to live in the property.

• Refinancing investment properties into FHA loans – You can refinance a rental property or second home into an FHA loan through FHA streamline refinancing. Your primary residence must be refinanced first.

Outside of these exceptions, the general rule is only one FHA loan at a time.

Qualifying for Two FHA Loans

To qualify for two simultaneous FHA loans, you’ll need:

• Minimum credit scores – At least 580 for both you and your co-borrower.

• Low debt-to-income ratio – Your total DTI across both mortgages cannot exceed 43%.

• Sufficient income – You’ll need enough income to afford both mortgage payments plus other monthly debts.

In addition, you’ll need to fully document that your second FHA property is your new primary residence located at least 100 miles away from the first.

Tip: Work on improving your credit score before applying to boost your chances of approval. Our free credit repair guide has steps you can take.

Alternatives to a Second FHA Loan

If you don’t qualify for two FHA loans at once, here are some alternatives to consider:

• Conventional 97 loan – Allows 3% down payment for first-time homebuyers.

• FHA streamline refinance – Refinance your current FHA loan into a new FHA loan.

• Sell your home – Selling your current home can provide funds for the down payment on a new conventional loan.

• Home equity loan – Tap into your home equity for the down payment on a second home.

• Family gift – Receive a financial gift from a family member for your new home’s down payment.

• Lease option – Rent your current home to tenants with the option to purchase.

Carefully compare all your options if a second FHA loan isn’t feasible.

Refinancing an FHA Loan

You may want to refinance your FHA loan at some point to lower your interest rate or payment. Here are some key points on refinancing FHA loans:

• You can refinance into another FHA loan or conventional loan.

• Your home must appraise for the new loan amount.

• Closing costs will apply, but can potentially be rolled into the new loan amount.

• Refinancing restarts the FHA mortgage insurance premiums.

• An FHA streamline refinance allows you to refinance with limited documentation.

Talk to a loan officer to see if refinancing could save you money. Arm yourself with knowledge beforehand by reading our refinancing guide.

Pros and Cons of FHA Loans

Before applying for one or multiple FHA loans, consider the key pros and cons:

Pros

• Low 3.5% down payment
• More flexible credit requirements
• Lower monthly mortgage insurance
• Fixed interest rates

Cons

• Upfront and recurring mortgage insurance premiums
• Limited to one loan at a time in most cases
• Stricter refinancing rules
• Lower loan limits than conventional loans

Carefully weigh the pros and cons before moving forward with an FHA loan.

The Bottom Line

While you can have multiple FHA loans over your lifetime, you generally can only have one at a time. This prevents the common sense of using FHA financing on investment properties.

However, exceptions exist when purchasing a new primary residence 100+ miles away, co-signing, or refinancing into an FHA loan. You’ll need to meet strict FHA underwriting guidelines to qualify for two loans simultaneously.

Thinking of applying for an FHA loan? Get personalized rate quotes from multiple lenders to find the best deal using our online tool here.