Can Spouses Simultaneously Get Separate FHA Loans?

Question

I and my wife are looking to start our investing career by doing some house hacking. For financing, we plan to use an FHA loan. I also have the option of using a VA loan. I understand that when using these loans, one is required to actually live in the house, limiting the scalability of this investing strategy because only one house can generally be lived in at a time. Here's my question: Would it be possible to sort of work around this limitation and get two separate FHA loans if I live in and hold one FHA mortgage on one property and my wife lives in and holds a separate FHA mortgage on a separate property? I know this seems kind of weird, but would it be possible/legal? It would allow us to really jump start our number of units. (We are hoping to start out with two 4-unit properties.) Alternatively, would it be possible for me to live at and hold a VA mortgage on one property while she lives at and holds a FHA mortgage at a separate property? Or is there another way we should consider putting to use our options? Thank you.

Casey Waters · Answer

Thank you all for your help. I always enjoy trying to come up with ways to make the most of the tools given to me. The FHA loan is clearly a useful tool. Perhaps, like Michael Gallagher said, it may come down to just asking many different banks until I find one that will work with me.

Colin Smith · Answer

Something not mentioned yet is you'll both have to qualify for each loan separately. So you cannot use your Wifes income to qualify and vice-versa. If you're going to follow the letter of the law, then each of you would be required to have your primary residence at each address. Do you really want to live apart for a year?

I would agree there is a high probability the underwriters will red flag the transactions and could kill both. They are going to scrutinize your finances and all your bank accounts. Don't expect to hide the transactions from either lender assuming you use two different lenders at the same time. If you do them one after the other, I would expect the second lender to not qualify you unless you have plenty of money for reserves for both properties. They will not let you to use the rents coming in from the property you're buying unless you can show tax returns with rental income already coming in, which it sounds like you don't have just getting started.

Lastly, have realistic expectations. If you're intending to use any low downpayment loan (VA or FHA), you will be over leveraged on a single property and you will be cash flow negative in this market. I would still encourage you to do it as everyone needs a place to live, including you, as house-hacking a multi-family is a really great way to go!

Jaysen Medhurst · Answer

Legal, @Casey Waters? Probably. Possible? That's another question. Even if you plan to stick to the letter of the law and live separately for at least a year, any lender is going to look at that with a lot of skepticism.

If you lay out your circumstances, we may be able to offer more options. How much cash are you working with? What price range are your target properties in? What will the rents be?

My initial worry is that in a market like Colorado Springs the rent-to-price ratio won't be conducive to cash flowing properties, especially with very little money down.

Michael K Gallagher · Answer

@Casey Waters talk about some creative financing!!! I like the idea but to tell you the truth I don't know if it would work.  If you actually have a living arrangement and situation where you live separately I think it would be possible from a legal standpoint but getting an underwriter to sign off might be a totally different ball game.

My wife and I purchased our duplex with an FHA Loan, and so much of those loans are sooooo incredibly subjective it really depends on the lender, the underwriter, and the inspector that you get in the draw on how big of a pain in the ass the process will be.

We basically had to switch lenders because the underwriter our first lender was using decided they didn't want to back the deal...its a long story that i'm happy to tell if you are interested, but I won't bore you with it now.  We also ran into a rule where if you are buying a property that has been bought and sold in under a certain amount of time (I can't remember the time off the top of my head, but maybe 6 months?) essentially a flipped property, then the FHA requires a second appraisal and let me tell you that opens up a whole Fu***** can of worms!

Long rambling way of saying I don't know factually if you will be able to do what you are talking about, but if you get a no on the first try....just keep asking lenders because from my experience there is a ton of grey area in those loans.  So you may just have to find the right lender.  I hope it works out though that would be epic!

Karl B. · Answer

If you lived in the property you have a FHA loan with (for a year) and your wife lives in the property she has a FHA loan with (for a year) you'd both be legit.

You could ask a lender if this can be done though being married would of course raise some eyebrows as it's assumed a husband and wife would cohabitate.