How Many Times Can I Get An FHA Loan? A Guide to Understanding FHA Loan Limits

Getting an FHA loan can be a great way for many homebuyers to achieve the dream of homeownership especially those with lower credit scores or limited funds for a down payment. But if you already have an FHA mortgage you may be wondering – how many times can I get an FHA loan? Can I qualify for another one if I want to buy a new house?

The answer is not straightforward. While there are no lifetime limits to the number of FHA loans you can obtain, there are restrictions on how many you can have at one time. Let’s take a deep dive into the details so you understand exactly how FHA loan limits work.

The Basics of FHA Loans

First a quick refresher on what FHA loans are and why they are popular with certain homebuyers. FHA loans are government-insured mortgages backed by the Federal Housing Administration.

Some key features that make these loans appealing

• Low down payments – You can put down as little as 3.5% if your credit score is 580 or higher. This is much lower than the standard 10-20% down required for conventional loans.

• Lenient credit requirements – FHA loans are available to buyers with credit scores starting at 500. Many conventional loans require much higher scores.

• Low mortgage insurance – FHA loans require mortgage insurance no matter your down payment size. But the rates are low compared to private mortgage insurance on conventional loans.

These benefits make FHA financing ideal for first-time home buyers or anyone who struggles with bad credit or saving for a large down payment.

However, FHA loans do come with some limitations…

You Can Only Have One FHA Loan at a Time

The biggest restriction is that you can generally only have one FHA loan at any given time. This policy is in place to prevent buyers from using FHA financing to purchase multiple investment properties or vacation homes.

FHA loans are intended to help people buy a primary residence, not build a real estate portfolio. So unless you meet special eligibility criteria, you can’t have two FHA mortgages simultaneously.

Exceptions That Allow Multiple FHA Loans

In certain situations, you may qualify for more than one FHA loan at once:

• Relocating for a new job – If you need to move far away for a new job, this may justify a second FHA loan before paying off the first.

• Divorce – If you jointly own a home with a spouse and are now buying another on your own after a divorce, you may be permitted two FHA loans temporarily.

• Increased family size – If your family has grown significantly and your current home no longer fits your needs, you may qualify for a second FHA mortgage. You’ll need to prove the jump in dependents and that your existing house cannot accommodate them.

• Co-signing – If you co-signed an FHA loan to help another borrower qualify, you can take out another FHA loan of your own.

As long as you meet one of these exceptions, there is no mandatory waiting period between getting multiple FHA loans. But you do need to prove you can afford two mortgage payments each month.

Qualifying for More Than One FHA Mortgage

To take on two FHA home loans at the same time, you must meet some financial requirements:

• Debt-to-income ratio – Your total monthly debt payments, including both mortgages, cannot exceed 43% of your gross monthly income. A higher ratio may make qualification difficult.

• Down payment funds – You’ll need cash reserves for the down payment and closing costs on the second home without tapping retirement savings. FHA loans allow down payments as low as 3.5% of the purchase price.

• Money for mortgage insurance – All FHA loans require upfront and annual mortgage insurance premiums. This is an extra expense to account for in your budget.

Meeting these standards demonstrates you can manage two mortgage payments plus other monthly debts.

Alternatives if You Don’t Qualify for Multiple FHA Loans

If you don’t meet the criteria for two FHA loans at once, you have a few other options:

• Apply for a different type of mortgage on the second home, such as a conventional loan. But you still must prove affordable debt-to-income ratios.

• Wait to apply for another FHA loan until you pay off the first or sell that property. Eliminating the existing payment makes qualification easier.

• Take cash out via an FHA streamline refinance on your current home. Use those funds as a down payment on the second property with a different loan program.

The Takeaway on FHA Loan Limits

The bottom line is that while you can get multiple FHA mortgages over your lifetime, at any given time you usually can only have one unless you meet special eligibility requirements. This prevents misuse of FHA loans to purchase investment homes.

Carefully consider if you meet the criteria for two FHA loans at once. If not, explore alternative mortgages for your second home so you don’t put your financing approval at risk.