FHA financing on a second home? (owner-occupied)

[Aaron Wakeman]

Hi BP community, I've been listening to podcasts and reading voraciously. Thanks for providing such a great resource.

I'm struggling to find a clear answer on this question even though I think the answer should be pretty straightforward. I own a townhome with conventional financing. (I put 20% down on a 30-year fixed loan four years ago, and the property has appreciated in value). My family has outgrown it and we are looking to purchase a new place that we would move into. We would prefer to keep the townhome as a rental (our HOA does allow rentals).

Can I qualify for a low-money-down FHA loan on my new (second) home?

Follow-up question then, if I do qualify: is this option the preferable one? I would pay PMI. The other option is to put a full 20% down but maybe I would prefer to keep the cash flexible to leverage elsewhere.

Thanks in advance for sharing your wisdom. :)

[Eric James]

As far as I know, the fact that you own another home won't disqualify you from purchasing another with an FHA loan. If you're going to live in the new home, why not just purchase with conventional financing?