The Federal Housing Administration insures mortgages featuring flexible credit guidelines and low interest rates to help borrowers achieve home ownership. The government-backed FHA loans are offered exclusively for a buyer's primary residence. You can't use the loan to buy a recreational or investment home. However, under some circumstances you may qualify for an FHA loan on another property even if you already own a home. FHA makes exceptions for certain hardships.
Existing Home You Don't Occupy
FHA makes exceptions for those who are divorced. If you own a home with your ex-spouse, but you no longer live in the home, you may qualify for an FHA loan to purchase a home you intend to make your primary residence. If you co-signed to help a family member gain approval for an FHA loan, you can still qualify for an FHA loan on your own primary home.
If you need to relocate for any reason, you may qualify for an FHA loan on a secondary residence. There are no work-related requirements for the relocation. You don't have to sell your home, but the new location must be outside a reasonable commuting distance from the first home. Typically, the homes must be at least 50 miles apart. FHA may require you to prove there is a lack of affordable rental housing in the area by submitting a signed statement from a local real estate professional.
FHA may allow you to purchase another home if you have outgrown your current home. You must provide evidence of the increase in household size and that the home no longer meets your family's needs. Any new household members must be legal dependents. To qualify under this exception, FHA requires a loan to value ratio of 75 percent or less on the first home.
Even if you meet the guidelines to apply for an FHA loan on a second home, FHA has the discretion to approve or deny your request. Any request for a hardship exception is submitted by the lender in writing to the FHA Home Ownership Center. Along with your request, you must provide proof to support the hardship. If the current home is no longer your primary residence, you must submit a signed rental agreement. You must also meet the standard FHA guidelines to qualify for a mortgage, including the ability to make mortgage payments on both properties. FHA may require you to have a reserve with enough funds to cover both mortgage payments and expenses for two months.
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