Needing loan advice for Owner Occupy

[Mia Kirsch]

Hi everyone. My husband and I are very new to the real estate world. We purchased our first duplex last year and we are currently house-hacking it. We used an FHA loan for the low down payment option. We want to start looking for another duplex but need advice on what to do. Are we able to use an FHA loan again for our second property? Do we need to refinance the first duplex into a conventional loan before purchasing our second property? We want to live in the next property and fully rent our first duplex. Thanks for any advice or suggestions!

[AJ Wong]

Hi Mia and congratulations. Generally only one FHA loan at a time but you usually can utilize a new FHA loan for a new primary after twelve months of occupancy in the current residence. There are some other extenuating circumstances that allow one to use more than one FHA loan at a time:

- Relocating to an area beyond reasonable commuting distance to your current residence or affordable housing is not available 

- Leaving a jointly owned property to buy a home, and co-owner (such as divorce) plans to remain in the home.

-Cosigned an FHA loan for someone else and now want to purchase your own home.

- Buying a larger home for growing family with evidence of increase in dependents and 25% equity in current home

Check in with @Joseph Chiofalo, he's a great friend and top lender nationwide for 20+ years. Good luck! 

[Mia Kirsch]

Hi AJ! Thank you so much for the information. We purchased our property in May 2023. If I'm understanding correctly, we could keep our 1st duplex with the FHA loan (until rates lower then we'll refinance) and then still use an FHA loan for our 2nd duplex since we have lived there for over a year? Thanks again.

[Joseph Chiofalo]

Hi Mia, 

How is the equity position in your current primary home ?  

If credit is strong and equity is high in the property you may be able to restructure that loan into a traditional conventional mortgage.   

Like my colleague said - there are some restrictions with trying to obtain another fha loan when you have an existing one in place.  

With that said you can still access financing at high loan to values on a conventional loan. 

If you didn’t want to restructure the primary, you could always get a small equity line or mortgage on that home to help utilize the funds needed for down payment / closing on the new home. 

[Lynn McGeein]

@Mia Kirsch we actually got a 2nd FHA but hard to find a lender who actually knew that was a thing and had to be more than 75 miles away for a new job as we didn't meet the other criteria like larger family. If you don't meet criteria for 2nd FHA, maybe look for a conventional product as there are many more options available than there used to be.

[Ryan Cleary]

Quote from @Mia Kirsch:

Hi everyone. My husband and I are very new to the real estate world. We purchased our first duplex last year and we are currently house-hacking it. We used an FHA loan for the low down payment option. We want to start looking for another duplex but need advice on what to do. Are we able to use an FHA loan again for our second property? Do we need to refinance the first duplex into a conventional loan before purchasing our second property? We want to live in the next property and fully rent our first duplex. Thanks for any advice or suggestions!

Hey Mia,

My wife and I were in a similar position last year (having an FHA and looking for another primary residence). The easy solution is using a conventional loan with a low down payment. We were able to purchase our new home with a 5% down payment, not jump through any FHA hoops and also receive a seller credit. To us, the conventional primary residence loan was a no brainer. Goodluck!