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Can You Have Two FHA Loans at the Same Time?

Can you have two FHA loans at the same time?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

According to program guidelines, borrowers are not permitted to have multiple FHA loans outstanding on principal residences except the under the circumstances outlined below:

1) Relocation for a job that requires the borrower to move at least 100 miles away from his or her current residence.  For example, if you are transferred to a new job in a different city and you have an FHA loan on your current home, you may be eligible to use the FHA program to buy a home in your new city as long as you are moving at least 100 miles.  In this case borrowers are required to provide documentation that verifies the job transfer or relocation.

2) Increase in the size of the borrower's family such that the borrower's current residence no longer meets family needs.  If your family outgrows the home you currently live in which was financed with an FHA loan, you may be able to keep the home and use the FHA program to buy a larger home that better accommodates your family.  To qualify for this exception the loan-to-value (LTV) ratio on your current home cannot exceed 75% according to your current mortgage balance and appraised property value.  This means you must have significant equity in your current home to be able to use an FHA mortgage to buy the larger home for your family.

3) Vacating a jointly-owned property with no plan to return but the property remains occupied by the other co-borrower / co-owner.  The best example of this exception unfortunately is a divorce when one party permanently moves out of the home financed with an FHA loan while the other party continues to live in it.  In this case the personal who moves out of the residence is eligible for an FHA mortgage to buy another home even though they remain on the mortgage for the home he or she no longer lives in. 

4) The borrower is a non-owner occupying co-borrower on another property, as long as the borrower intends to occupy the home he or she is buying with the new FHA loan.  For example, if a parent is co-borrower on an FHA loan to help a child buy a home that the parent does not live in, the parent is eligible for a second FHA loan to buy their own home to reside in.

This information is derived the FHA Program guidelines on the permissible number of loans and we provide a comprehensive overview of the FHA Mortgage Program for you to review.

I am unaware of any additional circumstances that enable borrowers to have two FHA mortgages outstanding at the same time but there may be additional exceptions for the FHA 203(h) Disaster Relief Mortgage Program.  The FHA 203(h) Program enables borrowers that live in Presidentially declared disaster areas whose homes were destroyed or seriously damaged to purchase or rebuild a home with no down payment.  We provide a detailed review of the FHA 203(h) Program on FREEandCLEAR.

Although it is unlikely, there may be additional scenarios under FHA 203(h) program guidelines when it is possible to have more than one FHA loan.  For example, if your current primary residence (with an FHA loan) was destroyed or severely damaged and is located in a Presidentially-declared disaster area.  Another scenario that may be subject to interpretation of FHA guidelines is if the damaged home is no longer your principal residence and you have permanently vacated the property.  In general, the FHA 203(h) Program has much more accommodating requirements than the standard FHA 203(b) Program.

In light of these more flexible guidelines, I recommend that you contact the FHA directly to clarify what is permissible with an FHA 203(h) mortgage. You can contact the FHA directly by calling 1-800-225-5342.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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