How many FHA Loans can I have?
FHA Mortgages have become increasingly more popular for 2 reasons. You just need 3.5% as a down payment and that many lenders will go down to a 620 credit score. What I am seeing now is the confusion about whether you can have 2 FHA loans because loan officers and lenders are giving the wrong information on the basic guidelines. And yes, you can have two, and even more, FHA mortgages.
Example :
Just yesterday, I had a client that was told that they need 30% down on their new property in order to have a FHA mortgage, because they currently have a mortgage. What gets worse is that this borrower has a conventional mortgage on their current property, not a FHA loan. Not only did the loan officer get the percentage down wrong, but they never asked what kind of mortgage they have now. In this example, this borrower could buy a new primary property with a FHA loan and only with 3.5% down. But beware of the Buy and Bail, mentioned below.
Why would someone have 2 FHA mortgages?
The main reason would be that borrower can't sell their current property that has a FHA mortgage because they could be under water on the house. And this could cost them additional monies just to pay off the house in order to sell it. Overall, the borrower has a need to move because they need to upgrade because of family size and or because they are relocating. But in order to do this, you have to fall into a few different categories. Please read on...
What things should you be aware of when it comes to having two FHA loans :
There are considerations in determining the eligibility for a borrower in having more than 1 FHA loan in regards to the exceptions that I will list below. The considerations are as follows :
- your length of time of time on the current property that you own, that has the FHA mortgage, and
- circumstances that make that same borrower want to purchase another property with a FHA insured mortgage
Policy Exceptions & Eligibility Requirements
- Increase in Family Size - If the borrower's legal dependents increase beyond a point that is not conducive to the current housing structure, that house no longer meets the family needs, the borrower must :
- pay down 25% equity in their current property or 25% down on their new property, which represents a 75% LTV (loan to value)
- provide satisfactory evidence of the increase in dependents & the property's failure to meet such family needs
Note : A certified FHA appraiser must do a new appraisal on the old home to determine such value. Tax assessments or market analysis reports aren't acceptable.
- Relocation - a borrower can relocate while currently having a FHA mortgage if :
- relocating and
- if they establish residency in an area not within reasonable distance from their current principal residence (reasonable will be different with all FHA lenders)
If the borrower returns to the area in which they currently own a property with a FHA mortgage, they are not required to re-establish primary residence in that property.
Note : The relocation doesn't need to be employer mandated in order to qualify for this exception.
- Vacating a jointly owned property - A borrower can be eligible if they are vacating a property that will be occupied by the co-borrower.
- An example would be in case of a divorce and the ex-spouse will be buying a new property with a FHA mortgage.
- Non-Occupying Co Borrower - A borrower who has co-signed for another family member to purchase or refinance a primary residence with a FHA mortgage, that borrower is allowed to buy or refinance their own property with a FHA loan. This is as long as they are a non-occupying co-borrower - FHA Non-Occupant Co-Borrower loans - Also known as Kiddie Condo loans
All of these exceptions are found in : HUD 4155.1 4.B.2.d
On a temporary basis – While FHA analyzes this situation - September 18th, 2008 - ML 2008-25
Converting Exsisting Homes to Rentals - Known as the FHA Buy and Bail - This is stated in Mortgagee Letter 2008-25, which is to prevent those that knowingly give false or misleading rental information/leases in which they will just let that property fall by the waste side and not make mortgage payments.
The borrower will now need to be able to have sufficient income to qualify for both mortgage payments. There are exceptions to this rule that relate to minimum loan to values and relocation's as well, so you need to cross reference these requirements to determine if you really do qualify.
Important Information : In all the cases listed above, if the borrower doesn’t meet these exceptions, then they can only obtain a FHA mortgage if :
- the homeowner pays off the current FHA loan in full or
- terminate ownership of that residence
A few things to remember - Not all lenders and or loan officers are on top of these current changes and or ask the appropriate questions when determining what you can qualify for when it comes to FHA Home Loans in general. Speak to a reputable loan officer and not one that tells you what you want to hear or sounds good.
NEW FHA LOAN CHANGES - 2010 FHA mortgage changes
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For more information on FHA loans, please go to this link. The FHA Expert
For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc
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FOLLOW ME ON FACEBOOK
- FHA Loans - USDA Loans - VA Loans -
- Energy Efficient Mortgages -
- Conventional Loans - 203 k loans -
- FHA Home Loans - Mortgages -
Experience & Knowledge at its BEST !!!
Follow me on:
______________________________________________________________________________________________________________
For more information on FHA loans, please go to this link. The FHA Expert
For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!
For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors
Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc
Great explanation on FHA loans it is great to know everything before you enter into a loan. Thanks for sharing this information.
Great information on FHA loans it is good to have all the information before entering into a loan. Thanks for sharing this information.
The exceptions to only one FHA loan are quite lenient. The only one I ever had was a non-resident co-borrower, MOM who had an FHA loan.
Wow great info. most people are so confused about everything that is often hard to get a striate answer. thanks for the view. keep up the good work.
What great info. Thanks for this informative post.
Thanks for the info. You demonstrated you are above the rest. Good stuff!
Good information Jeff. Thanks for laying it out. I will bookmark so I can refer to it when the need arises.
thanks for staying on top of it.
Another good one Jeff, regarding a subject that's often misunderstood. If only I had a dime for every time I heard "you can't have more than one FHA loan".
Gerry Suarez, Jr.
Your FHA Loan Pro!
Thanks for teaching me something I didn't Know !!!!!!!!!!!!!!!!!!!!!!
Very informative post. I was not aware of this. Thanks for sharing.
Jeff, Are you sure about this? Somebody said they heard about "someone" that did it and "So In So" told me that I could do it. Who should I believe YOU or "Somebody" or "So In So".
I hope you understand I am Joking. How many times have you heard these words. Educating these buyers is hard because they WANT TO BELIVE they can do what they want. Hearing for a Expert is not what they want to hear.
Hi Jeff -- This post is yet another example of why it's critically important for a buyer to partner with a loan officer who really knows the ins and outs of FHA loans. To do otherwise is throwing fate to the wind, surely not a position I would want to find myself in. I wonder what % of buyers qualify for both mortgages?
This is really helpful to borrowers and agents alike - We need someone like you to explain all these ins and outs! Thanks -
Jeff,
Thanks for the information. Great Post!!!
PAT.... . I think that is one of the problems, that many don't know what they enter into until the end, especially when problems take place because the loan officer didn't know or failed to explain specifics. thanks for the polite compliment.
LENN... . I have done a dozen or so that had 1 FHA loan and were seeking a new property as a primary residence and needed another FHA loan. Yes, about 75% of these had fit the non-occupant status. thanks
JAMES.... . it is extremely hard to get a straight answer. I keep seeing loan officers just say yes, even when not sure, just to not look bad up front. Many sales people, even loan officers are told to get the client in the door and then worry about the problems. Not good... and thanks for the kind words.
KIM... . my pleasure and thanks for the polite comment.
RAINE... . thank you very much for those kind words.. much appreciative.
MISSY.... . my pleasure.. I hope it does come in handy some day... and thanks for the compliment.
GERRY.... . just imagine if you had a dime every time... lol, I could then borrow millions off of you. And thanks for allowing me to bounce some of this off of you today. As you could see, my brain was on overload. thanks and thanks for your support.
MICHAEL.... . my pleasure.. I am glad that you could learn something new.
JESSE... . I don't expect too many realtors to even know about this. The sad part is that many loan officers and underwriters aren't even up on this kind of stuff. I know because I talk to loan officers daily... and have gone over some of this with underwriters in the past. thanks
TIM.... . you got me.. lol I actually was saying to myself.. wow, what is Tim talking about and what did I say or do? lol But you nailed that on the head, that so many just want to hear what they want to hear. But it certainly doesn't help when a loan officer says.. "trust me"... "don't worry"... "no problem".. how can a consumer know if that person is wrong then? right?
CHRIS.... . yes, it is very important.... and not just because they might be cheap and close loans. There is a lot more to it than being cheap... or just closing a basic loan. When it's this detailed, one needs to be on their best game.. at least this is my opinion... In regards to your question... I am not sure.. but I have one now that I am working on and he qualifies for both, but doesn't have the 25% equity in his first property... and this sucks, because they need to move up big time, because of the growth of the family size. thanks
Thanks for the post and explanation. Good resource.
Great post and Information. Thanks for posting.
Post is full of informatin on FHA mortgages.. Thanks for sharing this valuable info.
great 411 again Jeff!! I had a client in October that got the relocation exemption!
Jeff, you have just exploded a myth that I had always heard - only one FHA loan. You are the FHA BOMB! Bookmarked.
Jeff - Phenomenal summary of an often misunderstood FHA guideline.
This was just what I needed! Believe it or not this just came up today with a client. Thank you Jeff!
GREAT INFORMATION THANK YOU FOR SHARING. MY CLIENTS ARE HAVING TROUBLE WITH THE FHA PROCESS AND THERE LENDER. HAPPY I CAN PASS THE INFORMATION ON.
Good information, Jeff. These situations definitely need to be delineated properly for purchasers prior to them hitting the shopping phase for a new home purchase.
Exellent information. Thank for taking the time to get it in writing for us. I'll bookmark this page for future reference.
Exellent information. Thank for taking the time to get it in writing for us. I'll bookmark this page for future reference.
Thank you for this very detailed information. I am new in the business so this is very good to have learned, thank you.
This is really important information to know, especially with the number of people wanting to take advantage of the FHA loan.
Thanks Jeff, great information. I didn't know this and will be advising a client, this information may help her.
Great information Jeff. I did not know about the expection.
Belonger--thanks for clearing that up. Your post is very well written and organized, but just another example of how freaking CONFUSING this mortgage environment is right now.
LISA... . thanks.. I enjoy actually writing about this, even though it is boring at time. But most of all, I believe in the borrower really getting the best information and advice, and I am starting to see less than this, even in a market where more loan officers are leaving the business... and that flat out scares me...
RON... . my pleasure and thanks for the compliment..
GORDON.... . I hope this can be a good resource for many.. thanks
DAMON... . my pleasure and thanks for stopping by...
DORA & VINCENT... . I hope that you and or your clients can get something useful from this. thanks for the comment.
RENEE... . I had to step back and say... 411? Information.. I am so glued to the internet, that I don't even remember what 411 and 911 stands for any more... lol thanks for the compliment and that's great to hear about your client in October... and that this actually works for some when dealing with a loan officer and or lender that knows the ins and outs. thanks
FRANK & SHARON... . as long as I am the bomb and that you don't send me a bomb.. lol Seriously, I love dispelling myths and watch for my new web sit in 10 days or so, that will be all about Myths... I will keep you and everyone else posted on this. And it won't just be me.. it's a group of loan officers.. thanks
BRIAN... . I really appreciate that comment coming from someone as yourself, that is currently in the mortgage business. I get nervous when I write about stuff like this, because I pride myself on detailed information and I hate to miss anything.... especially when there was a lot to this one. Thank you very much for those kind words.
Jeff
Great information, I'm going to re-post the blog.
Good luck and success.
Lou Ludwig
RUTHMARIE.... . did it really? rut row, I hope my info is good enough.. lol Seriously, which situation came up? Meaning, that they currently have an FHA mortgage... but are they relocating? Their family size has increased? Please let me know and maybe I can be of some assistance.. because I have seen lenders screw some of this up... thanks
NIEMA.... . they are currently having loan issues as we speak? And is it in regards to one of the things that I mentioned above? Please don't hesitate to contact me... I would love to help and if anything, possibly answer any questions. My work e-mail is down because we have moved our corporate office... i can also be reached at jbelonger@verizon.net thanks
GUY.... . I couldn't agree with you more. I see some of these things get cleared up during the mortgage process, and then it's either too late and or things fall apart. my pleasure and thanks
FRANK.... . my pleasure and I hope it will help some in the future.. thanks
CHRISTINE>.... . I think this stuff is even more important than ever before because of 2 main reasons... people that currently have FHA loans and who need to move up because of family size, yet they can't sell their current house... and in many cases, a conventional loan is too expensive. thanks
GABE.... . my pleasure... and if you need me to talk to her, I would be glad too... thanks
RITU.... . my pleasure.. as I have stated, I love to help and educate. And thanks for the compliment.
ERICA... . hey Ramus... lol I still remember your last comment using my last name. I love it... I feel like you and I have our own boys club.. lol Anyhoo... thank you very much for that very polite compliment... thanks
Jeff, you do answer all of those questions that most of do not even know to ask!
Can't it be a girls club???
:)
LOU.... . thank for re-blogging this and for the kind words.. thanks
PAT... . thanks,I appreciate that. There were already a few comments in here that stated that their clients ars going through this now, and some are having difficulties. One said they just learned something new and that it could help out a potential client.. So I love doing this for others and maybe some business would come out of it.. thanks
ERICA... . sure it can be a girls club... I love women... ;o) And it would be fun to hang all of you. lol I can remember once in college, that I was friends with these girls that lived in one house.. 5 of them... and just sitting in their room with 3 or so all the time, and to hear what they talked about.. lol Anyhoo.. sure, let's start up a girls club..
Jeff, There seems to be a lot of misconceptions about FHA loans. You are a terrific resource to clear up the misinformation. Thanks - you provide really helpful information.
On a roll Jeff! On a roll!
JP
Great post! Thanks for sharing and congratulations on the feature.
Great post Jeff, very informative.
The challenge we face in south florida is that lenders often add their own blanket policies to the current FHA guidelines. So I recommend for mortgage brokers to check with their lender on specific FHA guidelines before they speak to clients.