Is It Possible For A Homeowner To Have More Than One FHA Mortgage?

Even though FHA Mortgages are no longer the go-to Loan Product they were prior to the changes FHA made in early 2013, they are still the best product for some existing Borrowers.  As a result a question I get from homeowners who currently have an FHA Mortgage is, Is It Possible For A Homeowner To Have More Than One FHA Mortgage?

The initial answer to this question is easy.  Yes it is possible for a Homeowner to have more than one FHA Mortgage.  However, the answer may be different if it involves having more than one FHA Mortgage at the same time.

A Borrower can have as many FHA Mortgages as they want, as long as it is only one FHA Mortgage at a time.  But if the Borrower needs to have more than one FHA Mortgage at one time the answer could be YES or NO.

The issue arises mainly when an FHA Borrowers is interested in purchasing another property, and wants to, or needs to keep their present property.  In this situation the the answer will depend on the reason for why they need to keep the present FHA Mortgage.

If the reason is the homeowner simply wants to keep their present property to rent it out for additional income, the answer is NO.  But if it is for other reasons, under certain circumstances a homeowner with an existing FHA Mortgage may possibly obtain a second FHA Mortgage, but the exceptions are few.  The main reason why the exceptions are limited, is because FHA does not do investment property loans, FHA is a owner occupied mortgage only.  This means the property must be the Borrower’s Primary Residence.

Because FHA is intended to be an owner occupied mortgage, and to prevent circumventing the intent of the loan, FHA will not insure a mortgage if it is determined the transaction was designed to use FHA Mortgage Insurance as a vehicle for obtaining an investment property.  However, FHA will allow for exceptions which fall within certain circumstances.  In order to determine if the homeowner is eligible for an exception the Underwriter must first take into consideration:

• The length of time the homeowner has owned the existing property with an FHA Mortgage.
• The circumstances which the homeowner needs to purchase another property.

Once the Underwriter has taken the above information into consideration, an exception may be granted for the following reasons.

• The homeowner is relocating.
• The homeowner is establishing employment in an area outside reasonable commuting distance from his/her current principal residence.

 NOTE: 

• If the homeowner later returns back to the location of the first property he/she Is not required to re-establish primary residency in the property, also 
• The relocation does not need to be employer mandated to qualify for this exception.
• The homeowner may be eligible for another home with an FHA-Insured mortgage if the number of his/her legal dependents increases to the point the present house no longer meets the family's needs
• The first FHA mortgage has a Loan-To-Value (LTV) of 75% or less, based on the outstanding mortgage balance and a current appraisal
• The Borrower is vacating the property, but the property will continue to be occupied by a Co-Borrower.  Example: A couple is divorcing
• The homeowner is a Non-Occupying Co-Borrower on a property that he/she purchased with a family member and the property is the principal residence for the other family member

If a homeowner with an Existing FHA Mortgage cannot meet one of the exceptions listed above, then the homeowner MUST:

•  Pay off the existing FHA Mortgage on the first residence, or
• Terminated ownership of that residence.

As you can see It Is Possible For A Homeowner To Have More Than One FHA Mortgage.  The exceptions are not easy to meet and document, but those who are able to, can have multiple FHA Mortgages at the same time.

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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,# Chester,# Deep River, and# Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com