How Often Can You Use An FHA Loan? A Complete Guide

Getting an FHA loan can be a great way for buyers with limited resources or credit challenges to achieve homeownership. With an FHA loan, you only need a small down payment of 3.5% if your credit score is 580 or higher. But can you get multiple FHA loans? Let’s dive into the details.

Overview of FHA Loans

FHA loans are government-insured mortgages backed by the Federal Housing Administration (FHA). They offer more flexible credit and down payment requirements than conventional loans, making them popular among first-time homebuyers.

Some key features of FHA loans include

• Low down payment – Only 3.5% down if your credit score is 580+
• Lenient credit guidelines – Minimum 580 FICO score required
• Mortgage insurance – Required for the life of the loan
• One-time upfront MIP – 1.75% of loan amount charged at closing
• Monthly MIP – Between 0.45% to 1.05% of loan amount

While FHA loans provide easier access to home financing, they do come with limitations:

• Can only be used to purchase a primary residence
• Limited to single-family homes and condos
• Max loan limits apply based on local home values

Can You Get Multiple FHA Loans?

Yes, you can get multiple FHA loans over your lifetime. There is no set limit on the number of FHA mortgages you can obtain However, there are restrictions on having more than one FHA loan at the same time

Generally, borrowers may only have one FHA loan open at once. This policy aims to prevent investors from abusing the program by financing multiple investment properties with FHA financing.

Since FHA loans can only go towards a primary residence purchase, most borrowers are limited to one loan until they sell their current home or pay off the first mortgage.

Exceptions to the One FHA Loan Rule

While the standard policy is one FHA loan at a time, there are some exceptions where borrowers can qualify for a second FHA mortgage:

• Relocation for a new job – If moving to a new area for work that’s beyond a reasonable daily commute.
• Divorce – If vacating a jointly-owned home and needing to buy a new primary residence.
• Increased family size – If current home is too small due to more dependents. Must provide evidence of family growth.
• Co-signing – Co-signing on an FHA loan doesn’t preclude you from obtaining your own.

To qualify for a second FHA loan under these exceptions, there is no mandatory waiting period. However, you must still meet all the normal FHA underwriting standards.

FHA Loan Requirements

Even if eligible for multiple FHA mortgages, you’ll need to meet the loan program’s minimum requirements each time. Key criteria include:

• Credit score – At least 580 FICO for 3.5% down, 500-579 for 10% down
• DTI ratio – Total debt obligations cannot exceed 43% of income
• Down payment – Minimum 3.5% with 580+ score, up to 10% with 500-579 score
• Mortgage insurance – Required on all FHA loans
• Foreclosure waiting period – At least 3 years since previous foreclosure

Your lender may also verify income, employment, and assets to ensure you can truly afford the mortgage payments.

How Often Between FHA Loans?

If you already have an FHA loan, how long should you wait before getting another FHA mortgage? There is no defined waiting period or cooling off period stated in the FHA guidelines.

As long as you meet one of the exception criteria, you can theoretically get approved for a second FHA loan immediately after obtaining your first mortgage or refinancing into an FHA loan.

However, from a practical standpoint, it takes time to build up enough equity to qualify while still making payments on your existing FHA mortgage. Most borrowers wait several years between FHA loans for this reason.

Tips for Getting Multiple FHA Loans

If seeking more than one FHA mortgage during your homebuying years, keep these tips in mind:

• Build up equity in your current home before applying for the next loan. Most lenders require at least 25% equity in the original property to qualify for two FHA mortgages.

• Improve your credit over time. The higher your score, the better your chances of approval on subsequent FHA loans.

• Pay down debts so your DTI ratio allows you to afford two mortgage payments comfortably.

• Save up reserves not just for the down payment but also 2-4 months of mortgage payments in your bank account.

• Research lender requirements as some have overlay guidelines on top of standard FHA policies for multiple loans.

Alternatives to Multiple FHA Loans

If you don’t qualify for two FHA mortgages at once, here are some alternatives to consider:

• Take out a conventional loan for the second home rather than FHA.

• Pay off the first FHA loan before applying for the second mortgage.

• Sell your current home and pay off the existing FHA loan with proceeds before getting a new FHA mortgage.

• Refinance your current FHA loan and take cash out to use for the down payment on a different type of loan for the second property.

The Bottom Line

While not very common, it is possible to have two FHA loans at the same time if you meet one of the permitted exceptions. In most cases, however, borrowers are limited to just one FHA mortgage until they sell, pay off, or refinance the original home.

Careful planning around credit, income, assets, and equity is key to successfully obtaining multiple FHA mortgages in sequence over your lifetime as a homebuyer.