Earlier today I was reading through a couple of Active Rain blogs and ran across the question about owning more than one FHA insured loan at a time. I picked up the phone to visit with a customer, clicked off the blog, never to return, so I thought I would answer it here. With so many foreclosed or distressed homes on the market I am continually receiving calls from potential 203(k)'s borrowers who have found a great deal and want to leave their current home for more room and built-in equity. The first question that should be asked of a homeowner is "do you own your current home and is it a FHA loan?"
To prevent circumvention of the restrictions on FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA only allows a borrower to obtain another mortgage using FHA insurance, without being required to sell an existing property covered by an FHA-insured mortgage, is if the borrower is
• relocating, and establishing residency in an area not within reasonable commuting distance from the current principal residence
• increase in family size, if the number of legal dependents increase to the point that present house no longer meets the family's needs.
• vacating a jointly owned property, if vacating a residence that will remain occupied by a co-borrower (example: divorce)
• non-occupying co-borrowers
(FHA Mortgage Credit Manual 4155.1 4.B.2.d)
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