Can You Qualify for an FHA Loan Twice? Everything You Need to Know

The FHA loan program helps make homeownership possible for buyers who may not qualify for conventional financing With low down payments and flexible qualifying guidelines, FHA loans open the door for first-time buyers as well as repeat buyers to purchase a home But can you qualify for an FHA loan more than once?

The short answer is yes, you can qualify for multiple FHA loans over your lifetime However, there are specific rules and restrictions in place to prevent abuse of the program Generally, you can only have one FHA loan at a time.

How Many FHA Loans Can You Have?

While there is no limit to the number of FHA loans you can obtain over your lifetime, you typically can only have one FHA-insured mortgage at a time. This is to prevent investors from using FHA financing to buy multiple investment properties.

However, FHA guidelines do allow exceptions for borrowers to hold multiple FHA loans simultaneously in certain situations:

• You are relocating for a new job and have not been able to sell your current home with an FHA loan.
• Your new home is more than 100 miles away from your current FHA-financed property.
• You need to upsize to accommodate a growing family, have at least 25% equity in your current FHA home, and can prove the home no longer meets your needs.
• You are divorcing, and your spouse will remain in the current FHA-financed home.
• You co-signed an FHA loan for someone else, but now want to buy your own home.
• You are purchasing a HUD-owned property that has been foreclosed on.

As long as you meet one of these exceptions, there is no waiting period required between obtaining multiple FHA loans.

Refinancing FHA Loans

When it comes to refinancing, you can have multiple FHA refinance loans as long as at least one property is your primary residence. Any other FHA-financed homes must be refinanced as investment properties.

For example if you have an existing FHA loan on your primary home and want to refinance a second home purchased with FHA financing into a rental property, you may qualify by meeting these requirements

• Your primary home must be refinanced through FHA’s streamline program without an appraisal or income verification.
• Your second home must be refinanced as an investment property.
• The new mortgage cannot be an adjustable-rate or cash-out refinance loan.

Meeting FHA Loan Requirements

Even if you already have an active FHA loan, you’ll still need to meet all the standard FHA loan qualification requirements to be approved for a second mortgage. Here are the key criteria lenders will evaluate:

Credit Score

• 580+ for 3.5% down payment
• 500-579 for 10% down payment

Debt-to-Income Ratio

• Maximum of 43% for all loans combined

Down Payment

• 3.5% down payment with 580+ credit score
• 10% down payment if score is 500-579

Rental Income

If renting out your current FHA-financed property, you’ll need:

• 2 years of consistent rental income history
• Rental income analysis from an appraiser
• Copy of the lease agreement
• Proof of security deposit/first month’s rent if not originally an investment property

Equity

• 25% equity in current FHA property if using rental income to qualify

Meeting these requirements ensures you have the capacity to manage multiple FHA loan payments.

Alternatives to Multiple FHA Loans

If you don’t qualify for a second FHA loan, other low down payment mortgage options may be available including:

• Fannie Mae HomeReady – 3% down payment and 620 minimum score
• Freddie Mac Home Possible – 3% down payment and 660 minimum score
• VA Loans – Zero down payment with no monthly mortgage insurance
• USDA Loans – Zero down payment in designated rural areas

Conventional loans with 3-5% down may also be an alternative for repeat buyers looking to minimize mortgage insurance.

The Bottom Line

Qualifying for another FHA loan is possible if you meet eligibility requirements. While limitations are in place to prevent abuse, FHA guidelines do account for life events like job relocations and family size changes.

If you already have an FHA loan but need financing for a new home, be sure to explore all your options. Conventional low down payment mortgages may provide more flexibility and cost savings for borrowers with established credit. Discuss your specific scenario with a lender to find the optimal loan program.