Can You Get a Second Home Mortgage With FHA?

Can You Get a Second Home Mortgage Using FHA?

Table of contents

Many assume that FHA loans are only for first-time homebuyers. While first-time buyers do make up the majority of borrowers that take advantage of these loans, the fact is many borrowers who already own a home or have in the past can take advantage of the benefits associated with an FHA loan.

But can you buy a second home with FHA? While buying a second home with FHA is possible, there are some considerations. Here we take a closer look at the FHA and how it can benefit you when buying a second home or even an investment property.

Key takeaways

  • FHA loans backed by US Federal Housing Administration, for those who may not qualify for conventional loans
  • FHA loans primarily for purchasing primary residence, but can be used for second home in certain circumstances
  • Eligibility requires credit score of 500-579 with 10% down payment, or score of 580+ with 3.5% down payment and verifiable employment history
  • Possible to qualify for second FHA loan in certain circumstances, not designed for investment properties but can be used in some scenarios.

What is an FHA loan?

An FHA loan is a mortgage loan backed by the U.S. Federal Housing Administration. These loans require lower minimum credit scores and smaller down payments than traditional mortgage loans. While the federal government insures these loans, they are actually administered by FHA-approved lenders. These loans are designed for those who may not qualify for more conventional mortgage loan options.

Can you use an FHA loan on a second home?

An FHA loan is designed to be used to purchase a primary residence. However, there are circumstances when you can purchase a second home with an FHA loan. For example, if you already own a home with an FHA loan but no longer live in it, such as through a divorce, you may be eligible for a second home purchase. Also, if you had a home with an FHA loan and decided to keep that home as an investment and rental property, you could qualify for an FHA loan for your new primary residence.

Before diving into more occasions when you may qualify for a second home FHA, let’s look at the eligibility qualifications for an FHA loan.

Eligibility

  • You must have a credit score of 500-579 with a 10% down payment or a score of 580 and above with a 3.5% down payment.
  • Verifiable 2-year employment history
  • Verifiable income with pay stubs, tax returns, etc.
  • Front-end debt ratio of no more than 31% of gross monthly income
  • Back-end debt ratio of no more than 43% of gross monthly income
  • You must wait two years after a bankruptcy or three years after a foreclosure before applying

Requirements

  • FHA approved appraisal that meets the HUD guidelines
  • Purchasing a primary residence
  • Maintain FHA mortgage insurance on the loan

Aside from these basic FHA requirements, there are other requirements when using an FHA loan on a second home. These can include higher down-payments, higher minimum credit score requirements, and a cash reserve.

Can you have more than one FHA loan at the same time?

While you can qualify for an FHA loan more than once, you can only have one FHA loan at a time under general circumstances. However, there are four scenarios where you may qualify for a second FHA loan while still paying for your first property and FHA loan.

  • Job relocation: If you are changing jobs and require a relocation over 100 miles from your current primary residence and do not want to sell your current residence, you may qualify for a second FHA loan to purchase your new primary residence.
  • Leaving a joint-owned property: Oftentimes, especially during a divorce, you may be the co-owner of a current home where you no longer reside. In this case, you may qualify for a second FHA loan for your new primary residence.
  • You were a cosigner for another property: If you acted as a cosigner for someone else to purchase a home with an FHA loan but never lived in the said home, you may qualify for an FHA loan to purchase your primary residence.
  • Growing your family: If your current home no longer meets the needs of your growing family, you may qualify for a second FHA loan to purchase a new primary residence and maintain your first home as a rental property.

Can you purchase an investment property with an FHA loan?

FHA loans are designed to purchase primary residences and not second homes or investment properties. As shown above, there are some scenarios where it is still possible to buy a second property as a primary residence, leaving your first home as an investment property. There are two other times where an FHA loan may be used to purchase investment properties.

  • Refinancing an existing FHA loan: Using a streamline refinance, you can refinance an existing FHA loan on a home you no longer live in as long as it lowers your monthly principal and interest payments.
  • Multi-family properties: You can qualify for an FHA loan for a multi-family, such as a duplex, as long as one of the units will be used as your primary residence.

Applying for an FHA loan on the second home mortgage

Before you consider applying for an FHA on a second home mortgage, you will want to focus on boosting your credit score and increasing your cash reserves. In addition, start with an FHA mortgage calculator to see how much you can afford when it comes to a second home and what specific qualifications you may need.

Financing your second home with FHA

While financing a second home with an FHA loan is not common, it is still possible. When you purchase the second home as your primary residence, it gives you a second investment home that can add to your overall net worth.

However, at Hero Home Programs, we understand how confusing the home buying process can be. We can help you navigate the FHA home buying process and help ensure you meet the qualifications for a new FHA loan when needed. To learn more about Hero Home Programs and how we can help, contact us online today.

Picture of Jacquelyn Sublett
Jacquelyn Sublett

I love teaching and writing on real estate, finance and mortgage topics. I find it fulfilling hearing stories of first time home buyers who we have helped with the home buying process. Writer for the Hero Homebuyer Programs™

Connect with the Author:

Recommended Posts

What Our Buyers Think

Jules S.
Read More
"5 star service is what you will get when you work with him!ᅠ Not only does he know his product like no other, he makes a special point of communicating throughout each transaction and his follow up skills are unparalleled. Perhaps most importantly, he delivers on his promises!ᅠ Give him a try for your mortgage needs.ᅠ You will not be disappointed!"
Jeremy H.
Read More
"An outstanding job handling refinances.  One of those knowledgeable, straight-shooters - which is really appreciated when you're shopping for a home loan. He can answer a million of questions with ease.  Looking back at the responsiveness, he was outstanding and you can do everything he suggested."
Jaina D.
Read More
"You can rely on them, very professional and quick in responding to your queries. He is very friendly and makes sure we understand the process and keeps us posted on the status of our loan. His efforts are greatly appreciated."
Eshawn W.
Read More
“By far the best lender we’ve worked with. Got us the best loan amount than any other lender. He worked with us hand in hand, he is professional, and he made the process enjoyable.”
Jaina D.
Read More
"You can rely on them, very professional and quick in responding to your queries. He is very friendly and makes sure we understand the process and keeps us posted on the status of our loan. His efforts are greatly appreciated."
Cass Z.
Read More
“I called looking for information about the process of applying for a mortgage/refinance and am just blown away with how helpful the information I received was!”
Stephanie F.
Read More
“I have hope because of you for making my home ownership dream come true. I feel such a connection with you and am excited to work with you. Have an amazing day!”
Rachel S.
Read More
"Highly ethical, attentive and helpful! A fantastic combination of personable and hard working. He makes everyone feel important and understood."
Cliff S.
Read More
“Hands down the best mortgage professional I’ve worked with in 20 years. Knowledgeable, honest, reliable and above all an outstanding communicator.”
Jose A.
Read More
"He worked on getting the lowest rate and kept me informed on each step of the process from the beginning to closing. Thank You!"
Nicholas H.
Read More
“Thank you for your prompt help and AMAZING assistance. Hands down, best lender I have ever worked with. Top notch!”
Tiffany
Read More
“I would be 100% interested in working more with you! You have proven to be an amazing lender”
Sandy C.
Read More
“Absolutely the most knowledgeable, friendly and honest expert I’ve ever worked with!”
Steve R.
Read More
"A pleasure to work with. He was very prompt and courteous with his responses and genuinely cares about the clients he works with."
Kevin H.
Read More
"Professional, responsive and honest assistance with the whole refinancing process from beginning to end."
Previous
Next

We help you reach home ownership.

No catch. No hidden fees.

Have you served in the military or your community as a healthcare provider, teacher, or first responder? Are you a member of your local union or work for your city government?

Are you looking to buy a home but don’t know where to start when it comes to finding your best home financing options?

At Hero Home Programs™, our teams are dedicated to helping community heroes like you through the home purchasing process by finding the best grants, rebates, and loans in your area in order to maximize your savings and help you achieve homeownership.

Contact our team today to learn how we can and mortgages can change your life.

Resource Guides

Complete A to Z guides on your home purchase journey.

Learn about the process for getting a home loan

What steps you can take to improve your credit score

Tips and tricks for moving into your new home

Your step-by-step guide for buying a new home

Scroll to Top