How Many FHA Loans Can You Have?

A Federal Housing Administration (FHA) loan is a type of mortgage that’s backed by the federal government. It’s a useful way for buyers with limited cash or lower credit scores to get a foot on the housing ladder.

If you already have an existing FHA loan, you might be wondering, how many FHA loans can you have if you need to purchase your next home?

The good news is that there’s no limit to how many times you can take out an FHA loan. However, there’s a catch. You can only have one at a time – that is unless you meet certain criteria.

What are the rules on getting multiple FHA loans?

While you can take out multiple FHA loans, you usually won’t be able to hold more than one at the same time. The main reason for this is that it prevents people from using FHA loans to purchase investment properties.

However, there are some circumstances when you can qualify for an additional FHA loan without having to sell or pay off your current mortgage.

When you can have more than one FHA loan:

• If you cosigned an FHA loan for someone else and want to purchase your own home
• You are leaving a jointly owned property to buy a home, but your co-owner plans to remain in the house, for example, during a divorce
• You’re relocated to an area beyond reasonable commuting distance to your current home and there’s no other affordable rental housing

What if you have a growing family and need a bigger home?

In some cases, you can also purchase another home with an FHA loan if you have a growing family and need more suitable housing.

However, you will need to provide evidence of an increase in dependents or that your home can no longer meet your needs.

Another condition for this is that you must own at least 25% equity in your current home. If this is not met, you will need to pay down the loan balance until you hit 25% equity.

FHA loan requirements

Whether you’ve already had an FHA loan in the past or are new to them, it’s a good idea to familiarize yourself with FHA loan qualifications before applying. That way, you can ensure that this loan type is the right choice for you.

To be eligible for an FHA loan, borrowers must:

• Have a FICO score of 500 to 579 (if putting 10% down) or,
• Have a FICO score of 580 or higher (if putting 3.5% down)
• Provide proof of income such as pay stubs or bank statements
• Show verifiable employment history for the last two years
• Use the home you’re purchasing as your primary residence
• Get the property appraised by an FHA-approved appraiser and meet HUD guidelines
• Have a front-end debt ratio (monthly mortgage repayments) of no more than 31% of gross monthly income
• Have a back-end debt ratio (mortgage payments plus other debt payments) of no more than 43% of gross monthly income

The flexibility of FHA loans makes them a popular choice for buyers with different circumstances. If you have previously benefited from this loan program, it’s well worth checking if you can get one again. Here’s more information that covers the benefits of an FHA loan.

If you decide that an FHA loan is right for you, OVM Financial can help you apply.

As you continue your FHA loan research, you might wonder, can you build a house with an FHA loan? We explain the specifics here.