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Updated about 2 years ago on . Most recent reply

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Josselyn Palma
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Can I qualify for an FHA Loan if I already have a conventional loan?

Josselyn Palma
Posted

Hello. 

I am ready to buy another property and I thought I would qualify for an FHA Loan since I have a property under a conventional loan that I am renting out to my tenants, but people are telling me I do not qualify.


Do I not qualify for an FHA loan even though I am not living in that residence? I thought I could use the rents from the tenants I am receiving and use it towards the FHA loan possibly?

I live somewhere else, and that property is not my primary residence. 


Can anyone share some feedback of why I do not qualify? Any suggestions on how I can qualify for an FHA Loan?

Most Popular Reply

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Albert Bui
  • Lender
  • Bellevue WA & Orange County, CA
1,437
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Albert Bui
  • Lender
  • Bellevue WA & Orange County, CA
Replied
Quote from @Matthew Kwan:

You can only use FHA to qualify as a primary residence with min 3.5% down. Are you trying to use it towards a single family or multifamily? Either as long you are living there you can still rent other units out however, if you are looing for triplex-fourplex then you would need to past the SS test (Self-sufficient test). @Albert Bui

The answer is yes you can have another FHA loan simultaneously (2 fha loans) if one of the 4 exceptions are met 1) you were a cosignor on another's FHA loan where there were multiple coborrowers, 2) family size increase and need to do so, 3) legal award or separation by court, 4) relocation due to employment.

If you're also moving out of the FHA property due to one of the above to use rental income offset or 75% gross lease calculation you'll need 25% equity (buy another appraisal report) and you'll need to be 100+ miles away (100+ mile rule).

There are ways to avoid the 100+ miles rule however you'll have to plan ahead.

Also if the above property is 3-4 units you'll have FHA self sufficiency rule as well so plan your cards accordingly otherwise find yourself with triple stack of rules to pass.

@Carlos Valencia@Matthew Kwan

  • Albert Bui
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