Federal Housing Administration (FHA) backed mortgages offer many options for people that may not qualify for a traditional mortgage. There are a variety of reasons a traditional mortgage may not work for you, such as only having a small down payment or having a low credit score. However, what if you already have a FHA backed mortgage on your current home and you want to buy another home with a FHA loan? Can you have more than one FHA loan at the same time?
Having Two FHA Insured Mortgages Is Possible, but Difficult
According to the FHA, it is possible to have more than one FHA loan at the same time. The FHA will allow you to keep a FHA insured mortgage on your current principal residence and take out a new FHA insured loan on a new principal residence only if you meet one of the following exceptions. Otherwise, you may only have one FHA loan at a time.
You Must Meet One of the Following Exceptions:
The Relocation Exception
If you're moving to a new area for work, you may be able to obtain a second FHA backed loan. You must be relocating due to your employment and your new home must be more than 100 miles from your current home in order to use this exception.
The Increase in Family Size Exception
Another exception involves your family size. You could qualify for a second FHA insured mortgage if your family has grown since you've moved into your home. This exception only works if you've had an increase in the number of legal dependents since you originally bought the home and the home no longer meets family needs. The FHA also requires your current FHA mortgage to have a loan-to-value ratio of less than 75 percent on your current principal residence as determined by a current appraisal and your outstanding mortgage loan balance. If you do not meet all the rules listed in this exception, you do not qualify for a second FHA insured loan.
The Vacating a Jointly-Owned Property Exception
You may qualify for a second FHA backed loan if you're vacating your current principal residence and that residence will continue to be occupied by a co-borrower. You must have no intent to return to the current principal residence in order for this exception to apply.
The Non-Occupying Co-Borrower Exception
If you were a co-borrower on a current FHA insured mortgage but you do not live in the home, you may qualify for a second FHA insured mortgage for a new principal residence for yourself. You could use this rule if you were a cosigner for someone else's FHA backed loan but never lived in the home. Alternatively, you may have moved out of a home still occupied by the co-borrower but still be listed as a cosigner on the FHA backed loan.
So, can you have more than one FHA loan at the same time? You can, but only if you meet one of the exceptions listed above. If you're looking to get a new FHA insured loan, make sure you shop around and find the best deal for you. You can compare multiple offers with one application on LendingTree. You could save a significant amount of money by simply comparing competing offers rather than just applying at one bank and hoping for the best.