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Does FHA Allow For Secondary Residences?

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

Does FHA Allow For Secondary Residences?  Eric Boucher wrote a blog in November of last year titled "Are Second Homes Considered Owner-Occupied or Investor-Owned?"  Eric's blog was on how Second Homes can impact a Condo Complexes ability to qualify for FHA Condo Certification, but it also got me thinking how many people are aware FHA does have a special provisions for Second Homes.

A Second Home or Secondary Residence as FHA refers to them, is a property a Homeowner will occupy for a part of the year, in addition to the property they consider their primary residence.  In essence the Homeowner really has two primary residences.

FHA is only a Primary Residence Loan Product, and not generally thought of as a possible loan product for a Secondary Residence.  But under special circumstances FHA will allow for one Secondary Residence.  The special circumstances is if the Borrower can demonstrate a hardship for the following:

  • The Borrower/Family is unable to find affordable rental housing which meets their needs. The Borrower will need to provide documentation to support his/her claim that there is a lack of affordable rental housing in the area.
  • The Primary Residence is not within reasonable commuting distance from work.

A Secondary Residence must also meet the following:

  • The Loan Amount on the Secondary Residence, will not be higher than 85% Loan-To-Value (LTV) or the lesser of the appraised value or sales price of the property.
  • The property MUST NOT be a vacation home or be used primarily for recreational purposes.
  • The Borrower requires a Secondary Residence because of:
    • Seasonal employment, or
    • Employment relocation

NOTE: 

Approval for a special exception for a Secondary Residence cannot be granted by a Lender's Direct Endorsed Underwriter (DE).  An exception can only be granted by the Lender submitting a request on behalf of the Borrower to the Local FHA Office in writing.

Does FHA Allow For Secondary Residences?  Yes they do, as long as the Borrower is able to meet the above requirements.

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Posted by

George Souto
NMLS# 65149

C (860) 573-1308
CALL 7 Days/Wk
Fax (860) 760-6891

Email Me
About Me
My Blog

I am a Mortgage Loan Officer who can assist you with all your mortgage & refinancing needs in
CT, and RI

I can assist you with your Conventional,
FHA, CHFA, VA, USDA, & 203K loan programs.

I reside in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Haddam. E. Haddam, Higganum, Chester, Essex, Deep River.

 

Comments(16)

TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

Good morning, George. It appears as if you have covered this topic extremely well.

 

Jan 24, 2014 06:33 PM
Debbie Gartner
The Flooring Girl - White Plains, NY
The Flooring Girl & Blog Stylist -Dynamo Marketers

George - this is great info for those curious about mortgages for secondary homes.

Jan 24, 2014 06:33 PM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Good morning George. Great job explaining the rules regarding a second FHA mortgage. I don't always understand the distance rule, as sometimes I don't thing we have a shot and there isn't a problem, other time I'm surprised that we get shot down.

Jan 24, 2014 06:58 PM
Barbara Todaro
RE/MAX Executive Realty - Happily Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good mornig, George....good information....I can understand why one might need this for seasonal employment....

Jan 24, 2014 07:04 PM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the information. I was not aware of it.

Jan 24, 2014 08:00 PM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

George, I always thought that a FHA purchase had to be owner occupied, not even 2nd home.  GREAT information, as usual!

Jan 24, 2014 10:53 PM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

George, This is very useful information. Thenk you.

Bill Roberts

Jan 25, 2014 12:06 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

George, this is great information, some of it quite new to me. I'm reblogging, since it's probably quite new to many people out there.

Jan 25, 2014 12:09 AM
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi George - That's a new one for me - I had no idea that was possible, even if the restrictions are very specific. Good to know - thanks for the heads-up.

Jan 25, 2014 12:54 AM
Larry Johnston
Broker, Friends & Neighbors Real Estate and Elkhart County Subdivisions, LLC - Elkhart, IN
Broker,Friends & Neighbors Real Estate, Elkhart,IN

Good morning George,  I was not aware of that option, however it's very spacific.

Jan 25, 2014 01:13 AM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Interesting. I dont think I have ever run into that scenario but its good to know its possible

Jan 25, 2014 01:24 AM
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond

Another wonderful share George we all need to know...I encountered this last year and didn't know they would do the loan.

Jan 25, 2014 05:33 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

George, I have had someof my buyers be able to buy FHA on a second home. The X mile rule away from work prevailed and we were able to get them in a home.

Jan 25, 2014 07:33 AM
Ralph Gorgoglione
Metro Life Homes - Palm Springs, CA
California and Hawaii Real Estate (310) 497-9407

Thanks for sharing this, George.  Very informative information about how the FHA views loans for secondary residences.

Jan 25, 2014 09:44 AM
Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living

George, thank you for these explanations.  There are tight restrictions on FHA loans for second homes but apparently they are not totally impossible.

Jan 26, 2014 09:58 AM
Rosie Crow
Serving Sugar Land, Richmond, Rosenberg, Missouri City - Sugar Land, TX
Exceeding Expectations. Delivering Results

Another excellent and informative blog! Thanks for sharing!

Jan 26, 2014 03:00 PM