How Many FHA Loans Can You Have? A Complete Guide

The FHA loan program allows buyers to purchase a home with as little as 3.5% down payment. This makes it easier for many people to buy their first home. But can you get more than one FHA loan? Here is a complete guide on FHA loan limits.

Overview of FHA Loans

An FHA loan is insured by the Federal Housing Administration (FHA). Key features include:

• Low down payments You can qualify for an FHA loan with a credit score as low as 500 and down payment as low as 35%,

• Lenient credit requirements FHA has flexible credit standards compared to conventional loans, You may qualify even if you have had past credit issues

• Accessible to first-time buyers. FHA loans are popular for first-time homebuyers who don’t have 20% for a down payment.

• Availability of 3.5% down payment. With FHA, you can buy a home with as little as 3.5% down if your credit score is 580 or higher.

However, FHA loans come with limits on how many you can have at once. Let’s look at those rules.

Can You Get More Than One FHA Loan?

Yes, you can get multiple FHA loans over your lifetime. However, there are restrictions on how many FHA mortgages you can have at the same time.

The general rule is that you can only have one FHA loan at a time. You usually need to pay off your existing FHA mortgage before getting another FHA mortgage.

This rule aims to prevent buyers from abusing the program by financing multiple investment properties with low down payments. FHA mortgages are intended for owner-occupied primary residences.

When Can You Get a Second FHA Loan?

In limited cases, you may qualify for two FHA loans at once. Examples include:

• Job relocation. If you move for a new job, you may keep your current FHA mortgage and get another FHA loan for your new primary residence.

• Divorce. If awarded the home in a divorce, your spouse may qualify for their own FHA mortgage.

• Bigger household. You may qualify for a second FHA loan if your family has outgrown your current FHA-financed home.

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

In these exceptions, the second FHA loan must finance your new primary home. The existing FHA property usually converts to a rental. Strict rules apply, so check with a lender.

Qualifying for Multiple FHA Loans

To get approved for two FHA loans, you must meet eligibility standards:

• Credit score. Minimum 580 credit score if putting 3.5% down. With a score of 500-579, 10% down is required.

• Down payment. At least 3.5% down if your credit score is 580+. With 500-579 score, 10% down minimum.

• Debt-to-income ratio. Total monthly debt payments, including both mortgages, should be below 43% of your gross monthly income.

• Occupancy rules. For any FHA mortgage, you must personally occupy the home as your primary residence.

• Other FHA rules. Like any FHA loan, a second loan must meet all standard FHA underwriting requirements.

As you can see, the bar is high for qualifying for two FHA mortgages at once. Work with your lender to assess if you may be eligible.

Alternatives to Multiple FHA Loans

If you don’t qualify for two FHA loans, you may have alternatives:

• Conventional loan. You may be able to qualify for a conventional mortgage with a down payment as low as 3-5%.

• FHA streamline refinance. You can refinance an existing FHA mortgage into a new FHA loan to lower your rate or payment.

• Pay off first FHA loan. Pay off the initial FHA mortgage before applying for another FHA-financed property.

• Sell first home. Sell your initial FHA home and pay off that mortgage, then buy another property with FHA financing.

• Improve credit. Work on improving your credit before applying for a second mortgage. This can help you qualify for a better mortgage rate.

Tips for Getting Multiple FHA Loans

If seeking multiple FHA mortgages, keep these tips in mind:

• Wait 12 months between FHA loans. It shows you can manage payments on the first home.

• Improve your credit score. The higher your score, the better your chances of approval.

• Save for a larger down payment. Putting down 10% or more improves eligibility.

• Lower your debt-to-income ratio. Pay down debts so you can qualify for two mortgage payments.

• Build home equity. If your current FHA home has 25%+ equity, it’s easier to get a second loan.

• Pick low FHA mortgage insurance. Paying an upfront premium minimizes monthly mortgage insurance costs.

The Bottom Line

While exceptions exist, the general rule is that you can have just one FHA loan at a time. This prevents abuse of FHA financing on investment properties. If you currently have an FHA mortgage, pay off that initial loan before applying for another FHA mortgage. With planning and a strong financial profile, however, some borrowers can qualify for multiple FHA-financed homes.