The FHA loan program offers flexible mortgage financing to buyers who may not qualify for conventional loans. But you may be wondering – can you have more than one FHA loan at the same time?
The short answer is generally no. While you can take out multiple FHA loans over your lifetime, you usually can’t have more than one at the same time.
In this comprehensive guide, we’ll explain:
- What an FHA loan is
- The rules around getting multiple FHA loans
- When you can qualify for two FHA loans
- Tips for qualifying for two FHA mortgages
- Alternatives if you can’t get two FHA loans
Let’s dive in!
What Is An FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration (FHA)
These government-backed loans make homebuying more affordable by allowing lower down payments and credit scores.
Key features:
- Down payments as low as 3.5%
- Minimum 580 credit score required
- Loans available for primary residences only
- Mortgage insurance is required
The low barriers to entry make FHA loans popular with first-time homebuyers and borrowers with less-than-perfect credit.
Can You Get Multiple FHA Loans?
In general, you can only have one FHA loan at a time.
This restriction aims to prevent investors from abusing the program’s lenient standards. The FHA wants to ensure availability for owner-occupant borrowers using the loan as intended – to purchase a primary residence.
However, exceptions do exist where you can qualify for two FHA loans simultaneously. We’ll cover those next.
When Can You Get Two FHA Loans At Once?
You may qualify for two FHA loans only under special circumstances, such as:
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Relocating for a job: If your new job requires you to move far away from your current home, you may qualify for a second FHA loan before selling the first home.
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Divorce: If awarded the home in a divorce, your ex-spouse may qualify for a new FHA mortgage on their own.
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Bigger household: You can get a second FHA loan if your family has expanded and your current home is now too small. At least 25% equity in the current home is required.
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Cosigning: You can cosign on an FHA loan for a family member while keeping your own. Remember, you become liable for the mortgage if they default.
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Purchasing a HUD home: FHA loans can be used to purchase a HUD-owned property that doesn’t have to be owner-occupied.
As you can see, the list of exceptions is short. Most borrowers are limited to just one FHA loan at a time.
Tips For Qualifying For Two FHA Mortgages
If your situation allows two simultaneous FHA loans, you still need to prove you can handle both payments. Here are tips for qualifying:
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Credit score: The minimum is 580 for 3.5% down and 500 for 10% down. The higher your score, the better.
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Debt-to-income ratio: Total monthly debts can’t exceed 43% of gross monthly income. Two mortgages make this difficult.
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Downpayment: At least 3.5% down required on each loan. Have funds available for both.
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Cash reserves: Most lenders want to see at least two mortgage payments in reserves. Save up to show you can cover both loans if needed.
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Rental income: If renting out the first home, provide two years of consistent income from it.
Getting the green light for two simultaneous FHA loans can be challenging. Make sure to satisfy all the requirements to improve your chances.
What If You Can’t Get Two FHA Loans? Alternatives.
If you don’t qualify for two FHA loans at once, you may want to consider:
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Refinancing the first FHA loan and taking cash-out to use as a down payment on a conventional mortgage for the second home.
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Paying down the first loan until you reach at least 25% equity, which may help you qualify for a second FHA loan.
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Selling the first home and using proceeds to pay off that FHA loan before applying for the second.
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Applying for a non-FHA loan like a conventional, USDA, or VA loan for the second home. These have less restrictive rules.
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Waiting to buy until you can sell the first home or pay off the FHA loan. This avoids juggling two mortgages.
While not always possible, finding an alternative solution can sometimes be easier than getting approved for concurrent FHA financing.
The Bottom Line
The FHA program is designed to help borrowers purchase their primary residence – not multiple investment properties.
As a result, you generally can’t have more than one FHA loan at the same time. But exceptions do exist if you meet the strict eligibility criteria.
If concurrent FHA loans don’t work for you, explore alternative mortgages. With proper planning, you can still achieve your goal of buying a second home.
Can You Get An FHA Loan Twice?
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Can You Have Two FHA Loans?
FAQ
Can I get another FHA loan if I already have one?
Can I get an FHA loan if I already have a conventional loan?
What is the FHA 75 rule?
Can you get another FHA loan if you sold your house?
Can I have multiple FHA loans at the same time?
However, it’s entirely possible to have multiple FHA loans at the same time, provided that you fit into one of the circumstances that qualify as an exception to the rule of a single FHA loan at a time, you have enough equity, you can use rental income and your DTI is low.
Can I get more than one FHA loan?
If you do not qualify to get more than one FHA loan there are still options for purchasing a home. Sell your current home. If you already own a home, it’s likely that the value has increased since you purchased it. Selling your home could result in a profit that you can use to purchase your next home using a conventional mortgage loan.
Can I apply for multiple FHA loans in my lifetime?
While you can apply for multiple FHA loans in your lifetime, you can usually only have one at a time. This prevents borrowers from using these loans, designed for people buying a primary residence, to purchase investment properties.
Can I take out multiple FHA loans?
The Federal Housing Administration doesn’t want borrowers to take advantage of the loan’s relaxed requirements and take out multiple FHA loans to purchase investment properties. While you can apply for multiple FHA loans in your lifetime, you can usually only have one at a time.