Husband and wife use VA and FHA

[Kelli Huang]

I know the basics of VA and FHA but you don't see this kind of situation too often. So I bought my primary home with VA under my name only more than a year ago. My husband does not have a mortgage and is not on the title. We now want to buy a property using FHA under his name only. Is this possible to do? Can we 'say' that we're moving or that he is moving out by himself? It is possible that he moves in to the new house to do fix and flip if we buy a fixer-upper. So technically he will move in to it. We don't want to get in trouble and go to jail but we are trying to do creative financing and FHA with a multifamily seems like the smartest thing we can do next. Has anyone done this with husband and wife own 2 VA, 2 FHA, or VA and FHA? Any thoughts?

[Kelli Huang]

Thank you Mitchell and Mindy (I love your podcast by the way). I have occupied both of my FHA and VA for 12 months already.

There will be no problem for me to move into the new property. I am more worried about muy existing VA loan. I remember when I was buying the VA home after living in the FHA home for over 3 years, the bank asked me to write a statement of why I was moving. I did have a good reason (bigger house for my family in another city). But it was well over 1 year since I lived there and they still wanted me to provide a valid reason for moving.

Now I am looking at a multifamily very close to my home. I hope the bank will not give me trouble for moving into a small multi from a 4,000 sq ft home.  

I also learned something very helpful today from googling :

A VA borrower is permitted to apply for an Interest Rate Reduction Refinancing Loan or IRRRL, which does not have the same occupancy requirements than a new purchase VA home loan.

According to the VA's official site, "The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL, you need only certify that you previously occupied it."

The rules for a VA IRRRL allow what the VA calls a "no money out of pocket" transaction, "by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs."

VA rules do require the interest rate on the new loan to be lower than the original rate, but there is an exception for those who wish to refinance an adjustable rate mortgage to a fixed rate mortgage.

It sounds like a win win situation. With IRRRL you get a lower interest rate and you don't need to occupy in it.