Can You Have Two FHA Loans at Once?

2nd FHA loan exceptions

Happy homeownersFHA loans are intended for principal residence financing, although you may be eligible for 2 FHA loans in certain circumstances.

Generally speaking, a borrower may have just one FHA mortgage loan at any one time. If they want to acquire a second FHA loan in the future, they must pay off the first one before applying for a second.

Exceptions exist, however, according to the Department of Housing and Urban Development (HUD). They will enable a borrower to have two FHA loans, but only under specified conditions, such as having a larger family or relocating for work.

Two FHA Loan Exceptions

1. Increase in Family Size

A borrower(s) may be eligible for a second home with an FHA-insured mortgage if the borrower(s) can show that:
the borrower's legal dependents have grown, and the home does not meet their needs; based on the outstanding FHA mortgage balance and a recent home assessment, the current primary residence's loan-to-value (LTV) ratio is equal to or less than 75 percent, or has been paid down to that level.

The FHA underwriter may request documentation of an increase in the number of dependents, as well as the inability of your current house to meet your family's needs.

2. Exception for Non-Occupying Co-borrower

Non-occupant co-borrowers on a current FHA-insured mortgage may be eligible for a second FHA-insured mortgage on a new principal home.
Borrowers having an FHA-insured mortgage on their principal residence may be eligible to co-borrow as non-occupying co-borrowers on several FHA-insured mortgages.

This loophole permits non-resident cosigners to cosign several loans. One loan for the son and one loan for the daughter, for instance.

3. Exception for Relocation for Employment

An FHA-insured borrower may not be required to sell their prior FHA-insured mortgage if they meet the following criteria.

  • has created, or is establishing, a new primary home more than 100 miles from the borrower's present (principal) residence;
  • and is relocating for employment-related reasons.

As long as the move meets the first two conditions, the borrower doesn't have to live in the original house when they move back to the area. Instead, they can get a new FHA-insured mortgage on a new primary residence.

4. Vacating a Jointly-owned Property

Young familyThe Borrower may be eligible for a second FHA-insured mortgage if he or she vacates (without intending to return) the principal residence that will be occupied by an existing co-borrower.

This exemption is often used in divorces in which one spouse moves out and purchases a new residence.

Debt to Income Ratio Requirement

Obviously, even if a borrower qualifies under one of the exclusions, they must first overcome a significant obstacle. The borrower's debt-to-income ratio must be sufficient to cover two mortgage payments, unless their present house has at least 25 percent equity, in which case rental income might be included under certain conditions (This must be documented with an appraisal).

If they have less than 25 percent equity in their property, they will not be allowed to utilize rental income and may not meet the DTI requirements.

Second Loan Alternative

There is an option available to you if you are unable to qualify for another FHA loan but still want a mortgage with a modest initial payment.

Conventional Loan Option

Conventional mortgage loan that satisfies the criteria of the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac).

The government-sponsored businesses Fannie Mae and Freddie Mac acquire and sell mortgages from lenders. This frees up funds for lenders, enabling them to accept a greater number of qualified buyers.

Using a standard mortgage is the greatest option to acquiring a second loan. The expected minimum down payment is five percent. The programs requiring a 3 percent down payment need at least one borrower to be a first-time homebuyer.

We have addressed the FHA's standards for a second home. The USDA has income restrictions, and the residence must be situated in a qualified location.


In conclusion, it is important to remember that a borrower can only have one FHA mortgage at a time. If they want to obtain another FHA loan, the first one needs to be paid off first, unless the borrower meets one of the 4 exceptions. This is an important rule to remember when considering an FHA loan.

SOURCE: Eligibility Requirements for Secondary Residences

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