How Often Can You Get an FHA Loan? Everything You Need To Know

The FHA loan program offers homebuyers numerous benefits like low down payments and flexible credit requirements As a result, many borrowers turn to FHA loans when purchasing their first home But can you get an FHA loan more than once? Let’s dive into the details.

Overview of FHA Loans

FHA loans are insured by the Federal Housing Administration and feature lenient qualifications compared to conventional loans Here are some key highlights of FHA loans

• Low down payments: Only 3.5% down required for borrowers with 580+ credit scores. 10% down for 500-579 credit scores.

• Low credit requirements: Minimum 500 credit score, with most lenders requiring 580+. Much lower than the 620+ often needed for conventional loans.

• Low monthly mortgage insurance: Upfront MIP of 1.75% of loan amount plus ongoing annual MIP of 0.45% – 1.05% of loan balance.

• Flexible guidelines Prior bankruptcies or foreclosures may not disqualify you, Gift funds can be used for down payment,

• One-time closing costs can be financed: Closing costs don’t have to be paid upfront and can be rolled into loan amount.

Given the favorable terms, it’s understandable why borrowers may want to utilize FHA financing more than once. But is it allowed?

Can You Get Multiple FHA Loans?

The short answer is yes, you can get more than one FHA loan over your lifetime. However, there are restrictions on having multiple FHA loans at the same time.

• You can only have one FHA loan on your primary residence at any given point.

• You cannot use FHA financing to buy multiple investment properties or vacation homes.

The “one FHA loan at a time” rule helps prevent abuse of the program. The lenient credit and down payment requirements are meant for primary home purchases, not real estate investing.

But this doesn’t prohibit you from getting another FHA loan in the future once your current one is paid off. For example:

• Buy starter home with FHA loan, live in it for several years
• Sell starter home, pay off FHA loan
• Buy larger home with new FHA loan

In this scenario, you qualified for two separate FHA loans over time by only having one active at any point. This is perfectly acceptable.

There is no lifetime limit to the number of FHA loans you can obtain. As long as you only have one active FHA loan on your primary residence, you can continue qualifying for new ones when you buy and sell homes over your lifetime.

When Can You Get Another FHA Loan?

Since you can only have one FHA loan active at a time, the eligibility timeline for getting another FHA mortgage depends on when your current one ends:

• Paid off existing FHA loan: No waiting period. You can apply for another FHA loan as soon as you pay off the prior one.

• Sold home with FHA loan: Same day. Once you sell the property and satisfy the old FHA loan, you can immediately apply for another FHA mortgage.

• Foreclosure/short sale: 3 year waiting period from event date until new FHA eligibility.

The main factor is that your previous FHA loan must be fully paid off, either through selling the home or paying it off without selling. As long as there is no outstanding FHA loan balance, you can move forward with reapplying.

Refinancing an Existing FHA Loan

If you currently have an FHA loan that you want to refinance, you may be wondering how this impacts your eligibility to get another FHA mortgage later on.

The good news is that refinancing your current FHA loan does not count against the “one loan at a time” rule. When you refinance, you are simply replacing your existing FHA loan with a new one. You are not taking out a second FHA loan.

Some common reasons for refinancing an FHA loan include:

• Lower mortgage rate
• Lower monthly payment
• Shorter loan term
• Cash-out refinance to tap home equity

No matter the motivation, refinancing into a new FHA product does not limit your ability to qualify for another FHA mortgage in the future. The “one FHA loan” restriction only applies to owning multiple properties financed with FHA loans, not refinancing your current property multiple times.

Tips for Getting Another FHA Loan

If you’re hoping to qualify for multiple FHA loans over your home buying lifetime, here are some tips:

• Make payments on time: Late payments on your current loan hurt your chances of approval on a future FHA loan.

• Keep credit scores high: The higher your credit, the better your chances of FHA loan approval. Minimum is 500 but keeping scores above 580 optimal.

• Pay down non-mortgage debts: Keep revolving credit card balances low and other installment debts affordable.

• Save for larger down payments: Putting down more than 3.5% can lead to better mortgage rates.

• Consider refinancing: Refinancing from FHA to conventional loan can eliminate mortgage insurance and show positive credit behavior.

The Bottom Line

FHA loans can be used more than once to purchase or refinance primary residences over your lifetime. There is no maximum to how many you can qualify for as long as you follow the “one FHA loan at a time” guideline. By maintaining good credit and paying off FHA loans when you sell or refinance, you can continue being approved for additional financing.