Mortgages have been intended to fund loans for houses. Since you are able to reside in just one primary home at a time, the FHA usually limits you to a FHA loan at a time, even though there are exceptions. FHA-insured mortgages might not be used to obtain investment properties.
Function
The FHA mortgage insurance program is designed to help people buy homes with little down payment and much more relaxed underwriting rules, together with the general goal of promoting home ownership, not investment. FHA loans are for an owner-occupied, principal home. To prevent the use of FHA loans to fund investment property, someone may get two FHA loans only in some specific conditions.
Size
A growing household is just one acceptable reason to acquire a second FHA loan. In the event the homeowner’s family grows so much that his existing home becomes too small, the homeowner might be allowed to buy a new residence backed by the FHA and keep the first house as a rental property. The homeowner must have the ability to demonstrate the FHA that the household size has increased and the present house is no longer adequate.
Relocation
Another exception to the only FHA mortgage rule comes into play in the event the homeowner goes to a new area not within commuting distance of the present house. An house can be bought by the individual in the new place and keep her present home. And the homeowner may relocate for reasons other than in an employer-forced move, as stated by the FHA handbook.
Co-Borrower
You can remain a co-borrower in an FHA loan and obtain another FHA mortgage. The FHA recognizes two kinds of co-borrowers. One is someone who divorces and stays a co-borrower despite moving from the house. The co-borrower may have the ability to acquire an FHA mortgage for a new home. The other type of co-borrower is someone who assisted a relative to get an FHA-insured mortgage. The first FHA loan is on the primary home of the household member and the individual who helped may find a second FHA mortgage for her own residence.
Considerations
The FHA puts a few limitations on obtaining a second FHA mortgage. For the borrower who would like to use the option to upgrade to a bigger house, the first home must have a loan-to-value of 75 percent or even less. The borrower will need to acquire an appraisal and pay the mortgage down to meet with the 75 percent limitation when the loan to value is significantly greater. To qualify for your next FHA loan, the debtor might need to have a signed lease agreement on the first residence and show cash reserves to cover the payment for 6 to 12 months on the mortgage when he loses the tenant.