FHA

[Ariam K.]

I have a question. So I currently have an FHA loan for a four unit in Milwaukee, WI. I am looking to do another FHA for a duplex does anyone know if that's possible? How many FHA loans are approved?

[Aaron Ram]

It is usually only used for your primary residence.

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Exceptions according to the handbook:

Size: A growing family is one acceptable reason to obtain a second FHA loan. If the homeowner's family grows so much that his current home becomes too small, the homeowner may be allowed to buy a new home backed by the FHA and keep the first home as a rental property. The homeowner must be able to prove to the FHA that the family size has increased and the current home is no longer adequate.

Relocation: Another exception to the single FHA mortgage rule comes into play if the homeowner moves to a new area not within commuting distance of the current home. The person can buy an FHA-insured home in the new location and keep her existing home as an investment property. And the homeowner can relocate for reasons other than in an employer-forced move, according to the FHA handbook.

Co-Borrower: You also can remain a co-borrower on an FHA loan and obtain another FHA mortgage. The FHA recognizes two types of co-borrowers. One is someone who divorces and remains a co-borrower despite moving out of the home. The co-borrower may be able to obtain an FHA mortgage for a new residence. The other type of co-borrower is someone who assisted a family member to get an FHA-insured mortgage. The first FHA loan is on the primary home of the family member and the person who helped may get a second FHA mortgage for her own residence.

Other considerations: The FHA puts several restrictions on obtaining a second FHA mortgage. For the borrower who wants to use the option to upgrade to a larger home, the first home must have a loan-to-value of 75 percent or less. The borrower will need to obtain an appraisal and pay the mortgage down to meet the 75 percent limit if the loan to value is higher. To qualify for the second FHA loan, the borrower may have to have a signed rental agreement on the first home and show cash reserves to pay the payment for 6 to 12 months on the first mortgage if he loses the renter.

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Hope this helps!