I have a FHA Loan. Can I have two FHA Loans? Important things to be aware of !!!

By
Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

 

How many FHA Loans can I have?

fha loans & fha home loans & fha mortgages

 

FHA Mortgages have become increasingly more popular for 2 reasons. You just need 3.5% as a down payment and that many lenders will go down to a 620 credit score. What I am seeing now is the confusion about whether you can have 2 FHA loans because loan officers and lenders are giving the wrong information on the basic guidelines.  And yes, you can have two, and even more, FHA mortgages.

Example :

Just yesterday, I had a client that was told that they need 30% down on their new property in order to have a FHA mortgage, because they currently have a mortgage. What gets worse is that this borrower has a conventional mortgage on their current property, not a FHA loan. Not only did the loan officer get the percentage down wrong, but they never asked what kind of mortgage they have now. In this example, this borrower could buy a new primary property with a FHA loan and only with 3.5% down. But beware of the Buy and Bail, mentioned below.

 

 

 

 

Why would someone have 2 FHA mortgages?

 

The main reason would be that borrower can't sell their current property that has a FHA mortgage because they could be under water on the house.  And this could cost them additional monies just to pay off the house in order to sell it. Overall, the borrower has a need to move because they need to upgrade because of family size and or because they are relocating.  But in order to do this, you have to fall into a few different categories. Please read on...

 

 

What things should you be aware of when it comes to having two FHA loans :

 

There are considerations in determining the eligibility for a borrower in having more than 1 FHA loan in regards to the exceptions that I will list below.  The considerations are as follows :

  • your length of time of time on the current property that you own, that has the FHA mortgage, and
  • circumstances that make that same borrower want to purchase another property with a FHA insured mortgage

 

 

Policy Exceptions & Eligibility Requirements

- Increase in Family Size - If the borrower's legal dependents increase beyond a point that is not conducive to the current housing structure, that house no longer meets the family needs, the borrower must :

  • pay down 25% equity in their current property or 25% down on their new property, which represents a 75% LTV  (loan to value)
  • provide satisfactory evidence of the increase in dependents & the property's failure to meet such family needs

Note : A certified FHA appraiser must do a new appraisal on the old home to determine such value. Tax assessments or market analysis reports aren't acceptable.

 

- Relocation - a borrower can relocate while currently having a FHA mortgage if :

  • relocating and
  • if they establish residency in an area not within reasonable distance from their current principal residence (reasonable will be different with all FHA lenders)

If the borrower returns to the area in which they currently own a property with a FHA mortgage, they are not required to re-establish primary residence in that property.

Note : The relocation doesn't need to be employer mandated in order to qualify for this exception.

 

- Vacating a jointly owned property - A borrower can be eligible if they are vacating a property that will be occupied by the co-borrower.

  • An example would be in case of a divorce and the ex-spouse will be buying a new property with a FHA mortgage.

 

- Non-Occupying Co Borrower - A borrower who has co-signed for another family member to purchase or refinance a primary residence with a FHA mortgage, that borrower is allowed to buy or refinance their own property with a FHA loan. This is as long as they are a non-occupying co-borrowerFHA Non-Occupant Co-Borrower loans - Also known as Kiddie Condo loans

 

All of these exceptions are found in : HUD 4155.1  4.B.2.d

 

 

 

On a temporary basis – While FHA analyzes this situation - September 18th, 2008 - ML 2008-25

 

Converting Exsisting Homes to Rentals - Known as the FHA Buy and Bail - This is stated in Mortgagee Letter 2008-25, which is to prevent those that knowingly give false or misleading rental information/leases in which they will just let that property fall by the waste side and not make mortgage payments.

The borrower will now need to be able to have sufficient income to qualify for both mortgage payments. There are exceptions to this rule that relate to minimum loan to values and relocation's as well, so you need to cross reference these requirements to determine if you really do qualify.

 

 

Important Information : In all the cases listed above, if the borrower doesn’t meet these exceptions, then they can only obtain a FHA mortgage if :

  • the homeowner pays off the current FHA loan in full or
  • terminate ownership of that residence

 

 

 

A few things to remember - Not all lenders and or loan officers are on top of these current changes and or ask the appropriate questions when determining what you can qualify for when it comes to FHA Home Loans in general.  Speak to a reputable loan officer and not one that tells you what you want to hear or sounds good.

NEW FHA LOAN CHANGES - 2010 FHA mortgage changes

 

 

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________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For more information about the 2009 Tax Credit for First Time Homebuyers : 2009 Tax Credit

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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______________________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

HUD

 

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Re-Blogged 8 times:

Re-Blogged By Re-Blogged At
  1. Tim Bradford 02/12/2010 08:18 PM
  2. Eric J 02/12/2010 10:07 PM
  3. Brian Anderson 02/12/2010 10:33 PM
  4. Sharon Alters 02/12/2010 10:39 PM
  5. David Krichmar 02/13/2010 01:21 AM
  6. Lou Ludwig 02/13/2010 12:04 PM
  7. Travis Newton 02/22/2010 12:36 AM
  8. Michelle Gibson 03/11/2010 09:37 AM
Topic:
Lending / Financial
Location:
Florida Broward County North Lauderdale
Groups:
All About Mortgages/Mortgage Networking
Mortgages
Realtors®
Realtors Needing the services of the Lending Powers
The FHA Mortgage Group
Tags:
fha
fha non occupying coborrowers
2 fha loans
two fha loans
two fha mortgages
fha lenders
fha mortgages
fha home loans
fha loans

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Rainer
34,741
Niema Thomas
Century 21 Beachside - Alta Loma, CA
CDPE, SFR, MBA

GREAT INFORMATION THANK YOU FOR SHARING. MY CLIENTS ARE HAVING TROUBLE WITH THE FHA PROCESS AND THERE LENDER. HAPPY I CAN PASS THE INFORMATION ON.

Feb 12, 2010 10:51 PM #23
Rainer
66,112
Guy Thomas
WR Starkey Mortgage - Colorado Springs, CO

Good information, Jeff. These situations definitely need to be delineated properly for purchasers prior to them hitting the shopping phase for a new home purchase.

Feb 12, 2010 11:06 PM #24
Rainer
247,351
Frank Castaldini
Coldwell Banker - San Francisco, CA
Realtor - Homes for Sale in San Francisco

Exellent information.  Thank for taking the time to get it in writing for us.  I'll bookmark this page for future reference.

Feb 12, 2010 11:25 PM #25
Rainer
247,351
Frank Castaldini
Coldwell Banker - San Francisco, CA
Realtor - Homes for Sale in San Francisco

Exellent information.  Thank for taking the time to get it in writing for us.  I'll bookmark this page for future reference.

Feb 12, 2010 11:26 PM #26
Rainmaker
235,352
Mark Montross
Catamount Realty Group - Burlington, VT
Listing and Buyer Specialist

Thank you for this very detailed information. I am new in the business so this is very good to have learned, thank you.

Feb 12, 2010 11:27 PM #27
Ambassador
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

This is really important information to know, especially with the number of people wanting to take advantage of the FHA loan.

Feb 12, 2010 11:31 PM #28
Rainmaker
1,916,735
Gabe Sanders
the BlueWater Realty team specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks Jeff, great information.  I didn't know this and will be advising a client, this information may help her.

Feb 13, 2010 07:10 AM #29
Rainmaker
471,956
Ritu Desai
Samson Properties - Ashburn, VA
Virginia Realtor-Fairfax/Loudoun/PW-703-625-4949

Great information Jeff. I did not know about the expection.

Feb 13, 2010 07:52 AM #30
Ambassador
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Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Belonger--thanks for clearing that up. Your post is very well written and organized, but just another example of how freaking CONFUSING this mortgage environment is right now.

Feb 13, 2010 11:49 AM #31
Ambassador
739,197
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

LISA... . thanks.. I enjoy actually writing about this, even though it is boring at time. But most of all, I believe in the borrower really getting the best information and advice, and I am starting to see less than this, even in a market where more loan officers are leaving the business... and that flat out scares me...

RON... . my pleasure and thanks for the compliment..

GORDON.... . I hope this can be a good resource for many.. thanks

DAMON... . my pleasure and thanks for stopping by...

DORA & VINCENT... .  I hope that you and or your clients can get something useful from this.  thanks for the comment.

RENEE... . I had to step back and say... 411?  Information.. I am so glued to the internet, that I don't even remember what 411 and 911 stands for any more... lol  thanks for the compliment and that's great to hear about your client in October... and that this actually works for some when dealing with a loan officer and or lender that knows the ins and outs. thanks

FRANK & SHARON... . as long as I am the bomb and that you don't send me a bomb.. lol  Seriously, I love dispelling myths and watch for my new web sit in 10 days or so, that will be all about Myths... I will keep you and everyone else posted on this.  And it won't just be me.. it's a group of loan officers.. thanks

BRIAN... . I really appreciate that comment coming from someone as yourself, that is currently in the mortgage business. I get nervous when I write about stuff like this, because I pride myself on detailed information and I hate to miss anything....  especially when there was a lot to this one. Thank you very much for those kind words.

 

Feb 13, 2010 11:56 AM #32
Rainmaker
1,800,860
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO

Jeff

Great information, I'm going to re-post the blog.

Good luck and success.

Lou Ludwig

Feb 13, 2010 12:01 PM #33
Ambassador
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Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

RUTHMARIE.... . did it really?  rut row, I hope my info is good enough.. lol  Seriously, which situation came up?  Meaning, that they currently have an FHA mortgage... but are they relocating?  Their family size has increased?  Please let me know and maybe I can be of some assistance.. because I have seen lenders screw some of this up... thanks

NIEMA.... . they are currently having loan issues as we speak?  And is it in regards to one of the things that I mentioned above?  Please don't hesitate to contact me... I would love to help and if anything, possibly answer any questions. My work e-mail is down because we have moved our corporate office...  i can also be reached at jbelonger@verizon.net  thanks

GUY.... .  I couldn't agree with you more. I see some of these things get cleared up during the mortgage process, and then it's either too late and or things fall apart.  my pleasure and thanks

FRANK.... . my pleasure and I hope it will help some in the future.. thanks

CHRISTINE>.... .  I think this stuff is even more important than ever before because of 2 main reasons... people that currently have FHA loans and who need to move up because of family size, yet they can't sell their current house...  and in many cases, a conventional loan is too expensive.  thanks

GABE.... . my pleasure... and if you need me to talk to her, I would be glad too...  thanks

RITU.... . my pleasure.. as I have stated, I love to help and educate. And thanks for the compliment.

ERICA... . hey Ramus... lol  I still remember your last comment using my last name. I love it... I feel like you and I have our own boys club.. lol  Anyhoo...  thank you very much for that very polite compliment... thanks

 

Feb 13, 2010 12:04 PM #34
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Jeff, you do answer all of those questions that most of do not even know to ask! 

Feb 13, 2010 12:15 PM #35
Ambassador
1,277,253
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

Can't it be a girls club???

:)

 

Feb 13, 2010 12:15 PM #36
Ambassador
739,197
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

 

LOU.... . thank for re-blogging this and for the kind words.. thanks

PAT... . thanks,I appreciate that.  There were already a few comments in here that stated that their clients ars going through this now, and some are having difficulties. One said they just learned something new and that it could help out a potential client.. So I love doing this for others and maybe some business would come out of it.. thanks

ERICA... .  sure it can be a girls club... I love women... ;o) And  it would be fun to hang all of you.  lol  I can remember once in college, that I was friends with these girls that lived in one house.. 5 of them... and just sitting in their room with 3 or so all the time, and to hear what they talked about.. lol  Anyhoo.. sure, let's start up a girls club..

 

Feb 13, 2010 12:31 PM #37
Rainmaker
159,273
Vicki Pedersen
Pedersen Real Estate - Riverside, CA
Providing Exceptional Real Estate Service

Jeff,  There seems to be a lot of misconceptions about FHA loans.  You are a terrific resource to clear up the misinformation.  Thanks - you provide really helpful information. 

Feb 13, 2010 06:39 PM #38
Anonymous
Anonymous
Anonymous

On a roll Jeff! On a roll!

 

JP

Feb 14, 2010 05:52 PM #39
Rainer
16,371
Jeff Colby
OmniQuest Media Labs - Obeo Distributor - Omaha, NE
President/CEO

Great post! Thanks for sharing and congratulations on the feature.

Feb 15, 2010 02:57 AM #40
Rainer
3,154
pedro casanova
New Option Realty - Kendall, FL

Great post Jeff, very informative.

The challenge we face in south florida is that lenders often add their own blanket policies to the current FHA guidelines. So I recommend for mortgage brokers to check with their lender on specific FHA guidelines before they speak to clients. 

Feb 24, 2010 04:22 PM #41
Anonymous
Anonymous
Chris
This is why I read active rain... its easy to find answers.
Apr 29, 2014 11:59 AM #42
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