FHA Loan Requirements For Second Homes – Here’s Everything You Need To Know

By: ROS Team

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The FHA loan has specific guidelines for second homes. If you own a second home or are looking to purchase one, check out this post for FHA loans for second homes.

What is an FHA Loan?

An FHA (Federal Housing Administration) loan is a type of mortgage loan that is insured by the Federal Housing Administration, which is a part of the U.S. Department of Housing and Urban Development (HUD).

The purpose of an FHA loan is to help individuals and families, particularly those with lower incomes or less-than-perfect credit, become homeowners.

FHA loans are popular among first-time homebuyers and those who may not qualify for conventional mortgage loans due to various reasons.

The FHA ensures the loan is provided by an approved lender, which reduces the lender’s risk and allows them to offer more favorable terms to borrowers.

FHA Loan
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FHA Loan Requirements For Primary Residence

To be eligible for an FHA loan, you must meet the following requirements:

  • Must have a minimum credit score of 580.
  • Debt-to-income ratio is considered, with limits typically set at 43% or below.
  • Must have steady income and proof of employment.
  • FHA loans have a minimum down payment requirement, which is typically 3.5% of the purchase price.
  • Must have Mortgage Insurance Premium.

Can I Get an FHA Loan For Second Homes?

FHA loans are primarily intended for primary residences, which means they are designed to help individuals and families purchase homes that they plan to live in as their main residence. Therefore, FHA loans are generally not available for second homes or investment properties.

However, there is an exception to this rule. For some specific circumstances, you may be able to obtain a new FHA loan for your next primary residence.

FHA Loan For Second Homes
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These circumstances include:

1. Relocation for Work

If you need to relocate due to a job change or transfer, and the new location is outside of reasonable commuting distance from your current home, you may be eligible for an FHA loan for a second home.

This scenario falls under the FHA “second home” exception, which allows borrowers to obtain a new FHA loan for their new primary residence while keeping the existing FHA loan on their current property as a second home.

2. Increase in Family Size

If your current home no longer accommodates your growing family and you need to purchase a larger home, you may be able to qualify for a second FHA loan.

This could include scenarios such as having additional children or needing to care for aging parents, where the current home no longer meets your needs.

3. Divorce or Legal Separation

In the event of a divorce or legal separation, where two individuals who were previously married or in a domestic partnership need separate residences, both parties may be eligible for individual FHA second homes.

Each person can apply for an FHA loan for their new primary residence while the existing FHA loan on the jointly-owned property remains in the name of the person who retains ownership.

4. Non-Occupying Co-Borrower

If you are a co-borrower on an existing FHA loan but do not reside in the property and want to purchase a new primary residence, you may be eligible for a second FHA loan.

This scenario allows a person to be a non-occupying co-borrower on an FHA loan for a family member or close relative while also qualifying for their own FHA loan for their primary residence.

FHA loan requirements for sellers: Sellers Cannot Make Down Payments on Behalf of the Borrower.” Source: FHA.

How Many FHA Loans Can You Have?

While you can apply for several FHA loans throughout the course of your life, you are usually only allowed to have one at a time.

This prohibits borrowers from using these loans, which are intended for persons purchasing a primary dwelling, to buy investment properties.

Apply for Several FHA Loans
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Can You Get An FHA Loan Twice?

Yes, it is possible to obtain more than one FHA loan throughout your lifetime. However, you need to meet one of the four conditions mentioned above.

Can You Use An FHA Loan If You Already Own A House?

Yes, you can use an FHA loan even if you already own a house. While FHA loans are commonly associated with first-time homebuyers, they are not limited to first-time buyers only.

If you meet the eligibility criteria and requirements for an FHA loan, you can use it to purchase a new primary residence or refinance an existing property.

Can You Get An FHA Loan For A Mobile Home?

Yes, it is possible to get an FHA loan for a mobile home. The FHA provides financing options for both manufactured homes and mobile homes that meet certain criteria.

How Many Times Can You Use An FHA Loan?

There is no specific limit on the number of times you can use an FHA loan. As long as you meet the eligibility criteria and requirements for an FHA loan, you can use it multiple times throughout your lifetime.

Final Thoughts

When it comes to obtaining an FHA secondary residence, there are specific considerations and requirements to keep in mind.

While FHA loans are primarily designed for primary residences, there are certain exceptions that may allow borrowers to qualify for a second FHA loan.

However, it’s important to note that occupancy requirements, financial qualifications, and lender policies play a significant role in determining eligibility.

It’s advisable to consult with an FHA-approved lender to understand the specific criteria and explore available options for obtaining an FHA loan for a second home.