One common misconception out there about FHA loans is that you can only have one at a time. Although it is most common for folks to have only one FHA loan, there are cases where Winter Haven, Florida home buyers might in fact qualify to purchase two homes using FHA financing.
If you live here in the Winter Haven area and are considering a second home purchase, contact me so we can determine whether you might qualify for a second FHA loan.
In the meantime, if you’re in the market for a second FHA home loan, here are some basic parameters to follow:
- Do you have limited down payment funds?
- Do the funds you have available for your FHA down payment qualify solely as family gift funds?
- Do you have a lower credit score than is typically allowed for a conventional loan? (Lower than 650)
If you answered yes to any of these questions, you may be eligible for FHA Financing on your second home purchase.
Now, you might wonder how it’s possible to gain FHA approval on a second home when you haven’t sold your current FHA financed property. That’s why I’m here. The following situations may allow you to have more than one FHA mortgage:
- Relocation - If you now work in a geographic area that represents an unreasonable commuting distance from current home, you may use FHA financing to purchase another home. The first home may be kept and maintained as a rental property if you wish.
- Increase in Family Size – Should your family “outgrow” your present FHA financed home, you may obtain a second FHA loan. The one caveat here is that your present FHA loan has to be paid down so that your balanced owed on the first home represents at or below 75% of the current appraised value. You may see this as 75% Loan to Value (LTV)
- Vacating a Jointly Owned Property – An example here would be a divorce, where you or your spouse stays in the first FHA financed home and the other seeks FHA financing on another property.
- Non-Occupying Co-Borrower – An example here would be a parent or other family member with one FHA loan serving as a co-borrower on a home for a college student living away from home. Because you are not living in the second home, you are defined as a “non-occupying co-borrower” – retaining a joint interest in the new property as well as primary interest in your first FHA financed home.
Now, you’re probably asking: “But wouldn’t the debt owed on your first FHA financed home factor in when qualifying for the second one?” The answer may surprise you!
In most cases, the majority of debt you carry on your first FHA financed home will not be counted when you apply for your second FHA home loan!
Here’s how this breaks out:
- Relocation – If you’re not going to be living in the first FHA financed home, but want to keep it – rent it out! Typically (depending on your area) 85% of the monthly rent can be used to offset the current payment.Simply furnish your FHA lender with a copy of a One-year lease and proof of security deposit ( or the first month’s rent), and chances are your second FHA home loan will be approved!
- Increase in Family Size - The same rules apply as for relocation, but you must also show that you have a least a 25% equity share in the first property.
- Vacating a Jointly Owned Property - In the divorce example, you may be exempt from the debt from your first FHA financed home being factored in at all, as long as:
- There is a final divorce decree that awards the home and the debt to you former spouse; or
- You can prove that the remaining occupant co-borrower has been making payments on their own and has an on-time 12-month payment history.
- Non-Occupying Co-Borrower - In a case where you’re the co-borrower on another home but do not plan to live there, you just have to prove that the current resident has has been making payments on their own and has an on-time 12-month payment history.
So there you are! The “One FHA Loan at a time” myth has been dispelled! Fact is, you may, in certain situations, have two FHA loans at a time. It’s exciting news, especially in today’s real estate market.
However, do keep the following in mind:
Though it’s possible to have two FHA loans out at once, the main thing that FHA is trying to avoid here is catering to investors looking to “game the system.”
As such, Lenders pay special attention to how long the you lived in the first FHA financed property and the circumstances that have you looking for another FHA home loan.
If you live in the Winter Haven or the Polk County, Florida area and find that you are in the market for a second FHA home loan, give me a call at 863-604-3019 or contact me online so we can get you squared away.
Apply for a Florida FHA Home Loan Today
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Kevin Sandridge
The Florida Mortgage Pro
Signature Home Funding
410 Laurel Cove Way
Winter Haven, FL, 33884 |
Mobile: 863-604-3019
Fax: 888-496-0265
kevin.s@sigfunding.com
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