Can You Get an FHA Loan More Than Once? Everything You Need to Know

Getting an FHA loan can be a great way for buyers with less-than-perfect credit or limited funds for a down payment to purchase their first home But what if you already have an FHA loan and want to buy another property – can you get approved for multiple FHA loans?

The short answer is yes, you can get more than one FHA mortgage over your lifetime. However, there are restrictions in place to prevent borrowers from abusing these government-backed loans.

In this comprehensive guide, we’ll cover:

• The basics of FHA loans
• Rules around having multiple FHA mortgages
• Exceptions that allow more than one FHA loan
• Tips for qualifying for a second FHA mortgage
• Alternatives if you don’t qualify for two FHA loans

Let’s dive in!

A Quick Refresher on FHA Loans

First a quick overview of what exactly FHA loans are and how they work.

FHA loans are mortgage loans insured by the Federal Housing Administration. Key features include:

• Low down payments – You can put down as little as 3.5% if your credit score is 580 or higher.

• Flexible credit requirements – FHA loans are available to borrowers with credit scores as low as 500.

• Allows gifts for down payment – The down payment can come from gifts from family, employers, or nonprofits.

• Lower monthly mortgage insurance – FHA loans require mortgage insurance, but rates are lower than conventional loans.

In exchange for these perks, FHA loans come with a big catch – you can only use them to finance a primary residence. They can’t be used for second homes or investment properties.

This brings us to our next section…

Rules Around Having Multiple FHA Mortgages

The FHA allows borrowers to take out multiple FHA loans over their lifetime. However, there are restrictions in place around having more than one at the same time.

Generally, you can only have one FHA loan at a time. This policy prevents buyers from tapping into FHA loans – intended for primary residences – to purchase investment properties.

So if you currently have an FHA mortgage, you typically can’t take out another FHA loan until you:

• Sell the property and pay off the current FHA loan in full
• Refinance into a non-FHA loan type

However, there are some exceptions where you may qualify for two FHA loans at once…

Exceptions That Allow More Than One FHA Loan

In certain situations, you may be permitted to take out a second FHA loan while still holding your current one. Some common exceptions include:

• Relocating for a new job – If your new job is not within a reasonable daily commute of your current home.

• Divorce – If leaving a jointly-owned home to purchase a new property in only your name.

• Increased family size – If you can prove your current home no longer meets your family’s needs.

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

In these special cases, borrowers may qualify for two FHA mortgages at the same time. However, you’ll still need to meet the lender’s financial requirements…

Tips for Qualifying for a Second FHA Mortgage

To be approved for two concurrent FHA loans, you’ll need to prove you can manage both mortgage payments. Here are some tips:

• Maintain a low DTI – Your total monthly debt payments, including both mortgages, must stay under 43% of gross monthly income.

• Have cash reserves – Most lenders require reserves equal to two mortgage payments. Save up!

• Pay mortgage insurance – FHA loans require upfront and monthly mortgage insurance premiums.

• Have sufficient equity – If staying in your current home, you’ll need at least 25% equity in the property.

Meeting these guidelines demonstrates you can truly afford both loan payments each month.

Alternatives if You Don’t Qualify for Two FHA Loans

If you don’t meet the criteria for a second FHA loan, you have a couple options:

• Take out a different loan type – You may qualify for a conventional or USDA loan instead. Shop around!

• Pay off your FHA loan first – Pay down the balance or sell your property to repay your current FHA mortgage before applying for another.

• Refi into a non-FHA loan – You can then tap home equity for your next down payment.

The Bottom Line

While you can get multiple FHA loans over your lifetime, restrictions limit borrowers to just one FHA mortgage at a time in most cases. This helps prevent abuse of the program.

But if you genuinely need a second home, unique exceptions may allow you to qualify for two FHA loans simultaneously. Meet the lender’s DTI, equity, and credit requirements to improve your chances.