FHA loan in the same year as a conventional mortgage?

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Spencer Glaser if you want to buy a new home as an FHA purchase, and you currently have another mortgage (vacating primary property) that is a conv loan or fha loan (doesn’t matter which kind) and on that property you want to use rental income, the guideline for FHA states that then in order to use that rental income on that vacating current primary the new home must be located over 100 miles away.

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Michael Cohen Spencer Glaser Yes, I did come across that. However, I've also seen at least one other lender mention there's a caveat to the rule, and it's what I mentioned above--that if you first leave the current primary and rent it out for a few months before applying for the new FHA loan, then the 100 mile rule won't apply. I'll have to do more research.

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@Gregory L. @Spencer Glaser This is directly from FHA Guidelines (Book 4000.1) in regards to calculating income: "If Rental Income is being derived from the Property being vacated by the Borrower, the Borrower must be relocating to an area more than 100miles from the Borrower's current Principal Residence." So yes, if you need the rental income to qualify for the FHA loan, it must be more than100 miles away. If your DTI can support both properties without the rental income, it doesn't apply.

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Spencer Glaser You should do more research on the 100 mile FHA rule. So far I'm seeing it isn't dead set in stone. For instance, the rule seemingly only applies if you *need* the rental income from your first mortgage to qualify for the 2nd. If you don't need to use the rental income, then the 100 mile rule isn't applicable. Also, it appears the rule is in play should you be directly leaving your current primary to live in the FHA home. So, say you left your primary now, rented it out and moved elsewhere for a few months, and then applied for the FHA loan the 100 mile rule wouldn't be applicable. Do your own research and talk to lenders, but the insight I've provided above is out there.

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Paul D. is correct and it slipped my mind: you cannot finance a home purchase using FHA when you own another property within 100 miles. Have you considered a conventional 97% LTV option?

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Spencer Glaser , Was your conventional loan primary, or investment? If it's primary, then you could have some issues because to lenders it'll look like you're acquiring investment properties with owner occupied loans. You're perfectly fine if your first loan is non owner occupied. Otherwise you'll have a lot of difficulty getting approved, especially with it being only a few months since your first purchase. Lenders normally want to see at least a year gap.

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Wow, thank you for the insight Paul Defngin! So my first purchase was a duplex with a primary conventional mortgage through a local bank that required owner occupancy. I now want to use an FHA loan to acquire my second property and move in to the second property. It sounds like there is a "seasoning" period and i need to remain an owner occupant in my first home for about a year before i can get an FHA loan, or else it looks fishy like I am using owner occupied loans for investment purposes. I have added some value to the first duplex so if I refi out of the primary mortgage, can i then get an FHA without waiting a full year?I have a full-time job and a decent debt to income ratio so i dont really need to use the minimal rental income. Does that make the 100 mile away issue moot?

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If you have a history of rental income, backed by two years (not "a few months") of Schedule E tax returns, then:Rental Income from Other Real Estate HoldingsStandard Rental Income from other real estate holdings may be considered Effective Income if the documentation requirements listed below are met. If Rental Income is being derived from the Property being vacated by the Borrower, the Borrower must be relocating to an area more than 100 miles from the Borrower's current Principal Residence. The Mortgagee must obtain a lease agreement of at least one year's duration after the Mortgage is closed and evidence of the payment of the security deposit or first month's rent.__________________________________If you have no, or limited, history of rental income, then:Limited or No History of Rental IncomeWhere the Borrower does not have a history of Rental Income for the Property since previous tax filing, including Property being vacated by the Borrower, the Mortgagee must obtain an appraisal evidencing market rent and that the Borrower has at least 25 percent equity in the Property. The appraisal is not required to be completed by an FHA Roster Appraiser. Two- to Four-Units The Mortgagee must verify and document the proposed Rental Income by obtaining an appraisal showing fair market rent (use Fannie Mae Form 1025/Freddie Mac Form 72, Small Residential Income Property Appraisal Report) and, if available, the prospective leases. One Unit The Mortgagee must verify and document the proposed Rental Income by obtaining a Fannie Mae Form 1004/Freddie Mac Form 70, Uniform Residential Appraisal Report, Fannie Mae Form 1007/Freddie Mac Form 1000, Single Family Comparable Rent Schedule, and Fannie Mae Form 216/Freddie Mac Form 998, Operating Income Statement, showing fair market rent and, if available, the prospective lease.

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Hey @Spencer Glaser - sorry for not responding quicker. No, the 100-mile rule is for all FHA loans, regardless of the DTI, income, etc.

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Paul D. Michael Cohen Since you're both lenders, could you speak on what I've stated regarding purchasing a conventional property with an owner occupied loan, and then trying to finance an FHA owner occupied loan only 4-6 months later? I don't believe either of you have touched on this, and in my experience with contacting a large number of lenders, this would be a glaring problem.