Can you use FHA 3.5% DP multiple times??

Question

Hello BP community,

I'm getting into real estate investing with the buy and hold househacking strategy and planning on going the FHA 203K route.

I know if you're a first time home buyer you can get away with 3.5% down payment when owner occupied. Looking to live there for a year, move out, rent that unit I was in and hope to rinse and repeat.

my question is, is it possible to once again use FHA with the 3.5% DP or would I have to put more down since I would already own a first home?

Jason Wray · Answer

Gabriel,

The best way to use an FHA loan is to buy the first home and at the (6 month mark) for title seasoning purposes refinance into a conventional loan.  Three things can happen which are all benefits, One remove FHA MIP monthly insurance, Two convert loan to conventional and free up FHA eligibility to buy using FHA again and Three you can and might be able to take out some cash for the next purchase.

You eliminate the 12 month occupancy seasoning when you refinance into a conventional loan and it allows you to move out at month 6/7 after refinance.  "NEVER"- move out prior to refinance beccause property automatiacally becomes a "Non-Owner Oc" a.k.a rental and the rates are higher and LTV options are lower for cash out.

Jason Wray · Answer

I understand and you can only have one FHA loan at a time. There are some circumstances where you can have two if the second home is larger in terms of GLA due to an increase in family size. The opposite is also accepted when your older and retiring and need a smaller home. But to continue to use the FHA 203K back to back is going to be a very hard sell to the underwriter. They are trained to look for investors using loop holes to buy more rentals.

FHA allows you to use a second time if your buying a home closer to school, work or again fits one of the above situations. You can also use a Fannie/Freddie homestyle loan that allows for renovations.

FHA allows you to use a second time if your buying a home closer to school, work or again fits one of the above situations.  You can also use a Fannie/Freddie homestyle loan that allows for renovations.

Dave Skow · Answer

@Gabriel L.- thanks -  FHA 203K loan  will be a great  program to use  when you buy a property that needs a lot of rehab

Gabriel L. · Answer

Thanks for the heads up Dave. I failed to mention that I want to use construction loans (203k) for value add.

Dave Skow · Answer

@Gabriel L.- you  cant  hold 2 FHA loans at once time .....in your scenario - you would need to  refinance the FHA loan to a conventional loan  in order to be able to  use a new FHA loan for the  2nd home   ...fyi - there are  conventional loans  that  require as little as a 3% down payment  for a  primary residence  purchase so  consider using this  program to keep the FHA  option open for   a future  property  down the road

Zach Wain · Answer

Multi unit homes FHA definitely looks better

Gabriel L. · Answer

Well the reason I want to do FHA 203k is because it's a better alternative than homestyle. Because with homestyle loan the DP depends on the number of units in the house. The more units the more DP, with 203k that's not the case. My main thing is not putting a higher DP

Zach Wain · Answer

Keep in mind, every single FHA loan you do there is a 1.75% Up front PMI charge that is a 1 time cost.  If you take a 1.75% (of the loan size charged in fees, which goes directly to FHA) hit on every single deal just to refinance out of it, you are losing a good chunk of money over and over again.  Make sure you take a good look at all of your lending options, FHA is not always the best path

Can you use FHA 3.5% DP multiple times??

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