House Hacking - FHA loans

[Ryan Badowski]

I bought my current residence 2 years ago with an FHA loan. Because I've lived in it over a year, am I now allowed to go buy another home and move into it utilizing a new FHA loan.

 
If not, what is the best, low down-payment financing strategy?

[Chace Fraser]

@Ryan Badowski welcome to BP!

As you may or may not know, for the most part, you can only have one FHA mortgage in your name at one time. There are exceptions that are few and far between (like if you were moved to another area by your work), but for the most part, it's only possible to have one at a time. If two people are on the same FHA loan, then this counts as their one FHA loan.

This is an all-to-common pitfall that people get into because they didn't plan out their financing strategy for any properties beyond the first one (either because they didn't know to ask or the lender wasn't savvy at the time to explain the challenges of using an FHA loan). Or the FHA loan was their only option at the time.

Honestly, the best thing to do would be to speak with a lender who has worked with house hackers before and have them help you devise your strategy for your next purchases. You can bring the following suggestions to them and ask questions.

However, here are your options:

1. Purchase the next property with a conventional loan. The conventional loan programs and down payment rates for owner occupied multi-family properties change often. Simply google all of the following: “fannie mae matrix”, “freddie mac matrix”, “Home possible matrix”.
2. Have someone else buy the property (significant other) and leap frog the loans. This is what my wife and I did.
3. Refinance your FHA loan into a conventional traditional owner occupied mortgage. However, there may be minimum equity requirements and/or a need to live at the property for an additional amount of time… like around 6 months (verify with your lender).
4. Refinance your FHA loan into a conventional investment property (non owner occupied) loan. It'll have less attractive terms and rates, but you don't have to wait that 6 months.
5. Sell

Best of luck and let us know what you decide to do!