When moving into a home, you want to make sure youâll be living in a safe environment. FHA loans guarantee that prospective homeowners are selecting a residence that satisfies FHA minimum property standards and is safe to live in. These requirements might stand in the way of becoming a homeowner, but they also shield you from unpleasant or even dangerous living circumstances.
Dreaming of buying a second home? You might be wondering if you can use an FHA loan to finance it, even if you already own a home with an existing FHA mortgage. The good news is, yes, it’s possible to qualify for a second FHA loan under certain circumstances. However, there are specific requirements you’ll need to meet, and it’s not as straightforward as simply applying for another loan.
So, can you get two FHA loans?
Yes, in short, but it’s not as easy as you might think. Generally speaking, FHA loans can be used by borrowers to buy a primary residence. There are, however, some exclusions to this rule that permit a second FHA loan in particular situations.
The following four major exclusions will enable you to be eligible for a second FHA loan:
- You’re not living in the home you own: If you own a home but don’t currently reside in it, you may be eligible for a second FHA loan. This could be the case if you went through a divorce and moved out of the house, or if you’re renting it out as an investment property.
- You’ve outgrown your existing home: If your family has grown and your current home no longer suits your needs, you may be eligible for a second FHA loan. However, this is on a case-by-case basis, and you’ll need to prove to the FHA that your existing home no longer meets your family’s needs.
- You relocated because of your job: If you relocated for a new job and didn’t want to sell your existing home, you may qualify for a second FHA loan. However, the new home must be at least 100 miles away from your current home. This is known as the FHA 100-mile rule.
- Other personal reasons: There are other personal reasons that may qualify you for a second FHA loan, but these are typically handled on a case-by-case basis. If you think you have a reason to qualify for a second FHA loan, you can write to the FHA Homeownership Center and explain your situation.
What are the requirements for a second FHA loan?
Just like first-time homebuyers, borrowers who want to use an FHA loan to purchase a second home must meet specific requirements. These include:
- Minimum credit score of 580: This is the minimum credit score required to qualify for an FHA loan. However, a higher credit score will typically result in a lower interest rate.
- No recent bankruptcies or foreclosures: If you’ve had a recent bankruptcy or foreclosure, you may not be eligible for an FHA loan.
- Debt-to-income ratio of less than 43%: This is the percentage of your monthly income that goes towards debt payments. A lower debt-to-income ratio will make you a more attractive borrower to lenders.
- Stable income and employment: You’ll need to provide proof of stable income and employment to qualify for an FHA loan.
- Proof you qualify for the exception to have a second FHA loan: You’ll need to provide documentation to support your claim that you qualify for one of the exceptions to the FHA’s one-loan-per-borrower rule.
- Proof you can afford both loans: If you’re responsible for the first FHA loan, you’ll need to prove that you can afford the payments on both loans.
How to apply for a second FHA loan:
If you think you meet the requirements for a second FHA loan, you can follow these steps to apply:
- Check your credit: Get a free copy of your credit report and check for any errors or outstanding debts.
- Pay down your balances: Aim to have less than 30% of your credit lines outstanding. This will help improve your credit score and increase your chances of mortgage approval.
- Complete an application: You can apply for an FHA loan online or through a mortgage lender.
- Provide your supporting documentation: You’ll need to provide documentation of your income, assets, and debts.
Additional tips for getting a second FHA loan:
- Work with an experienced lender: An experienced lender can help you navigate the process of getting a second FHA loan and ensure that you meet all the requirements.
- Be prepared to make a larger down payment: The down payment requirement for a second FHA loan is typically higher than for a first-time homebuyer loan.
- Be patient: The process of getting a second FHA loan can take longer than getting a first-time homebuyer loan.
Alternatives to an FHA loan:
If you’re not eligible for another FHA loan, you might be able to meet your needs with another type of loan. These include:
- Conventional loan: Conventional loans typically have stricter requirements than FHA loans, but they may offer lower interest rates.
- Home equity loan or line of credit: If you have equity in your existing home, you may be able to get a home equity loan or line of credit to finance your second home purchase.
- Private loan: You may be able to get a private loan from a bank or other financial institution. However, private loans typically have higher interest rates than FHA loans or conventional loans.
The bottom line:
Getting a second FHA loan is possible, but it’s not as simple as getting a first-time homebuyer loan. You’ll need to meet specific requirements and be prepared to make a larger down payment. However, if you qualify, an FHA loan can be a great way to finance your second home purchase.
Utilities In Good Condition
Utilities, such as water, sewer, gas and electricity must be in good condition. Additionally, a unit must have its own utility connection. For example, if buying a townhome, utility services must be available as individual meters.
Crawlspaces must provide enough room for inspection without any debris. Proper ventilation in the attic and basement is also required. If the inspector finds any mildew or mold in the crawl space, that could be a dealbreaker.
FHA Home Requirements For The Houseâs Exterior
The FHA requires specific criteria for the houseâs exterior. Hereâs a closer look at the basic requirements.
The property must have direct street access. The FHA won’t approve the loan if getting access requires going through another property.
A lack of proper water drainage is a significant safety hazard. If water is draining toward the home, flooding and mold issues are common. The FHA requires proper water drainage away from the home.
Safety hazards outside of the home, like an uneven driveway, could disqualify a home from an FHA loan.
NEW FHA Loan Requirements 2024 – First Time Home Buyer – FHA Loan 2024
FAQ
Can I use an FHA loan if I already bought a house?
What disqualifies you for an FHA loan?
What would disqualify a home from FHA?
Can I do an FHA loan on a second home?
Do I need a FHA loan to get a mortgage?
To be approved for a mortgage, you’ll need to meet FHA loan requirements for the following: While the government establishes minimum guidelines, lenders have some discretion to set their own requirements. As with any debt, lenders want to feel confident that you’ll repay the loan.
Do I qualify for a FHA loan?
A credit score of **580 or higher** (less than 580, but no less than 500 would require at least a 10% down payment) .2.No history of bankruptcy in the last two years .3. No history of
Do you need a first-time home buyer to qualify for an FHA loan?
You don’t need to be a first-time home buyer to qualify for an FHA loan. However, FHA loans are popular with first-time home buyers because they couple low down payment requirements with more lenient standards for credit scores and existing debt.
Do you need a credit score to get an FHA loan?
When it comes to FHA loans, lenders have the ability to set their own guidelines in addition to FHA guidelines. For instance, some lenders may require a credit score of at least 640 to approve an FHA loan application. There’s less variation in down payment requirements for FHA loans.