The government backed FHA loan is a popular choice among first time homebuyers as well as repeat buyers because of its forgiving debt-to-income ratios, low down payment requirements and lack of reserves required. These relaxed requirements don’t come without restrictions!

Being a program designed for owner occupants, the rules behind limiting the number of FHA loans a person can have at any one-time makes sense. There are exceptions for requiring you to sell (or refinance) your home before getting another FHA loan if you meet specific criteria.

1. Relocation – If you are relocating for an employment-related reason AND can establish that your new primary residence is 100 or more miles from your current residence, you may be able to get a new FHA loan.
2. Increase in family size – If the number of legal dependents in your household has increased and your current property fails to meet the needs of your family, you may be able to get a new FHA loan. A caveat to this scenario is that the Loan-to-Value (LTV) of your current residence must be equal to or less than 75%. An appraisal is typically required to confirm this ratio
3. Vacating a jointly-owned property – if you are vacating a property that you have been residing in as your primary residence and you have no intent of returning, you may be eligible for another FHA loan.
4. Non-occupying co-borrower – If you are a non-occupying co-borrower on an existing FHA loan you may qualify for another FHA loan on a new property that will be your primary residence. Likewise, if you have an existing FHA loan on your primary residence you may qualify as a non-occupying co-borrower on another FHA loan.

For each exception, additional conditions will apply.

For example if you are vacating a property because of a divorce, you will have to provide a marriage dissolution and quit claim deed for the vacating property.

If your family size has increased because a child was adopted, adoption papers will be required to confirm the date in which that occurred. You are not required to have filed a tax return documenting an increase in legal dependents but you will have to provide adequate documentation to support the increase in household size is permanent.

There are numerous scenarios that could prompt an exception for having more than 1 FHA loan at a time. Call Traci Ranic, your local licensed mortgage professional who offers FHA loans for details prior to considering a new home purchase.