How Many Times Can You Get an FHA Loan? A Comprehensive Guide

Getting an FHA loan can be a great way for borrowers with less-than-perfect credit or limited funds for a down payment to achieve the dream of homeownership. But if you already have an FHA loan, you may be wondering – how many times can you actually get approved for one of these government-backed mortgages?

I did some extensive research to get the full scoop on FHA loan eligibility, so keep reading to find out everything you need to know about getting multiple FHA loans.

An Overview of FHA Loans

First, let’s go over the basics of what an FHA loan is and who they are designed for.

FHA loans are mortgages insured by the Federal Housing Administration. The biggest perk of these loans is that they only require a 3.5% down payment if your credit score is at least 580. This low down payment makes them more accessible for first-time homebuyers who don’t have a lot of cash saved up.

In addition to low down payments, FHA loans are available to borrowers with lower credit scores starting at just 500 They can be a good option if you have some dings on your credit history but still want to buy a house sooner rather than later.

However, FHA loans do come with a big catch – you can only use them to purchase a primary residence where you plan to live. You cannot use FHA financing to buy a vacation home or investment property. The FHA wants to promote homeownership, not real estate speculation.

You Can Get Multiple FHA Loans Over Time

Now that we’ve gone over the basics, let’s dig into the question at hand – how often can you get an FHA loan?

The quick answer is that there is no limit to how many times you can get approved for an FHA loan over the course of your lifetime. You don’t need to be a first-time homebuyer to be eligible.

For example, if you get an FHA loan to purchase your first house when you’re 25 years old, pay off that loan after 10 years, then want to buy a larger home at 40, you can absolutely get another FHA mortgage for your next purchase.

FHA loans are designed to help make homeownership achievable for anyone who meets the borrower requirements, whether it’s your first or fifth time buying a home.

But You Can Rarely Have More Than One at a Time

Here is where things get tricky. While you can get multiple FHA loans throughout your home buying years, in most cases you can only have one FHA loan outstanding at any given time.

This rule is in place to prevent borrowers from using FHA financing – which is intended for primary residences only – to buy multiple investment properties or vacation homes.

So if you currently have an FHA loan and want to buy another home, you will typically need to either:

• Sell your current home and pay off the existing FHA loan before closing on a new property with FHA financing

• Refinance your current FHA loan into a conventional mortgage before buying a second home with an FHA loan

Either of these options gets you down to just one FHA loan, meeting the requirement.

When Can You Have Two FHA Loans at Once?

There are a handful of special circumstances where you may qualify for two simultaneous FHA loans. But the criteria are strict, again to prevent abuse of the program.

According to FHA guidelines, exceptions allowing two FHA loans at once include:

• Relocation for a new job: If your new workplace is beyond a reasonable daily commute from your current home, you may be able to get a second FHA loan before selling the first property.

• Divorce: If you jointly own a home with a spouse but are now divorcing and need to purchase another residence, you may qualify for two FHA mortgages temporarily.

• Increased family size: If you can prove your family has expanded significantly and your current home no longer meets your needs, you may be permitted two FHA loans. You’ll need to provide evidence like birth certificates.

• Co-signing for a relative: If you co-sign an FHA loan to help out a family member, you can get another FHA mortgage for yourself. But remember, co-signing makes you 100% liable for the loan if they default!

In any of these situations allowing two simultaneous loans, you must have at least 25% equity in the original property. And as always, you’ll need to meet the usual FHA borrower requirements for income, credit score, debt-to-income ratio, etc.

Tips for Getting Multiple FHA Loans

If you think you might want more than one FHA loan during your homeownership journey, keep these tips in mind:

• Check your eligibility frequently: Review FHA requirements regularly to ensure you still qualify before applying again in the future.

• Monitor your credit: Keep tabs on your credit score and report so you can catch and correct any issues before applying for another FHA loan.

• Pay off your loan quickly: The faster you pay off an FHA loan, the sooner you can qualify to purchase another home with FHA financing if desired.

• Build up equity: Having at least 25% equity in your current home gives you the best shot at approval for a second FHA mortgage if needed temporarily.

• Consider conventional loans: If you have the credit score and down payment needed, conventional loans may offer greater flexibility if you want to buy multiple homes over time.

The Bottom Line

While FHA loans offer great benefits like low down payments, you do trade off some flexibility when it comes to buying multiple properties over time compared to conventional mortgages.

But in most cases, you can get approved for multiple FHA loans during your lifetime as long as you fully pay off the previous loan before getting the next one. This revolving door of FHA financing can help you move up the property ladder as your needs and budget grow.