How many FHA loans can you have?

If you’re looking to buy a second home and want to know how many FHA loans¹ you can have at one time, the answer is that you can only have one. However, that doesn’t mean that you can’t use an FHA loan to buy another property if you used an FHA mortgage to buy your first one.

In some exceptional cases, you may be able to qualify for a second FHA loan, or you can simply refinance your first FHA mortgage before getting a new one.

Key takeaways:

1. You can usually only have one FHA loan at a time, but there are a few exceptions.
2. If a major life event allows you to qualify for a second FHA loan, you’ll need to show proof of financial means to support both loans.
3. Consider refinancing with another loan type as an alternative to getting a second FHA loan.

Can you get an FHA loan twice?

You can take out more than one FHA mortgage loan during your lifetime. However, you can usually only have one at a time unless you have a special reason to qualify, such as relocating for work, getting divorced, or increasing the size of your family.

The reason for the limit is that the Federal Housing Administration wants borrowers to use FHA mortgages to buy a primary residence rather than taking advantage of the loan program’s relaxed guidelines to use them as investment property loans.

Are there any exceptions to the limit on how many FHA loans you can have?

There are some exceptions that may allow you to take out a second FHA loan before selling your current home or paying off your existing FHA loan.

Relocating  

You can take out an additional FHA loan if a new job isn’t a reasonable commute from your current primary residence. To qualify you usually need to be moving out of state or at least 100 miles away within your current state.

Divorce

You may qualify for a second FHA loan if you’re buying a house after a divorce and moving out of the home you currently share with the co-borrower and plan on buying a second home only in your name.

Increased family size

You can qualify for an additional FHA mortgage if your family has grown and your current home no longer meets the family’s needs. To qualify, you must submit evidence your family has increased in size, and your existing home is too small.

Co-signing

If you’re co-signing a mortgage loan with another family member to help them get approved for a mortgage (and you currently have an FHA loan for your own home), you may qualify for an additional FHA loan.

Remember, when you co-sign a loan, that loan becomes your responsibility, too. If the primary borrower stops making payments, you’ll be responsible for paying off the debt.

How to qualify for more than one FHA loan

Keep in mind that taking out two FHA loans means two mortgage payments every month. Make sure you can afford a second monthly mortgage payment. To qualify for a second mortgage, you must also earn enough monthly income to satisfy your mortgage lender’s income requirements. These requirements may include the following.

Debt-to-income ratio

First, you must prove you can afford two mortgage payments. Mortgage lenders typically require that your total monthly debts, including your mortgage loans, don’t exceed 43% of your gross monthly income.

If the two mortgage payments send your debt-to-income ratio (DTI) over the 43% threshold, you may struggle to qualify for a second FHA loan.

Down payment

You’ll also need enough for the down payment. You can make a down payment that’s 3.5% of a home’s final purchase price with at least a 580 credit score². If your credit score ranges from 500 – 579, you must make at least a 10% down payment. Rocket Mortgage requires a minimum 580 credit score for an FHA loan.

Savings

The more savings you have, the better you’ll be able to handle financial uncertainty without having to worry about making loan payments. That reduces the risk for lenders who offer you a loan, so most lenders will want to see that you have a solid savings buffer.

Keep in mind that this isn’t an FHA mandate but something lenders usually prefer when offering loans. You might find that different lenders have different amounts that they’ll want you to have saved before they offer a loan.

Mortgage insurance premium

When you get an FHA loan, you must pay an FHA mortgage insurance premium (MIP). This protects your lender if you default on your loan.

There are two forms of MIP: upfront and annual. Upfront MIP is 1.75% of the loan amount while the annual MIP varies from 0.45% to 1.05% depending on your loan term, amount, and loan-to-value ratio.

When getting a second FHA loan, you’ll need to pay upfront MIP for the loan as well as annual MIP payments for both loans.

Available equity

You'll also need at least 25% equity in your home to qualify for a second FHA loan. If you haven't built up enough home equity, you'll need to pay down your FHA loan balance until you reach the 25% equity threshold.

Alternative options to multiple FHA loans

If you need two mortgages and can’t wait to apply for another FHA mortgage until after you pay off your first FHA loan, there are options available.

Conventional mortgage

If you have a credit score of 620 or higher, you can take out another mortgage using a conventional loan. You can even qualify for a down payment as low as 3%². However, your new lender may not approve your loan application if having two mortgage payments sends your debt-to-income ratio over the 43% mark.

Freddie Mac Home Possible® loan

Freddie Mac Home Possible®³ loans are specialized loans aimed at low-to-moderate income homebuyers. They offer benefits such as low down payment requirements and flexibility when it comes to paying closing costs.

Note that the requirement of being a first-time buyer does not apply to displaced homemakers or single parents whose previous interest in a property was joint ownership in their marital residence, making these loans an option for some people with an existing FHA loan.

If you can meet this loan program’s slightly higher credit score requirement of 660 and are below your area’s median income, you might find a Home Possible to be a better option.

USDA loan

USDA mortgages are another type of specialized loan. These are designed to help people purchase homes in designated rural areas. They can be an appealing alternative to FHA loans because they share some benefits, such as easier underwriting requirements. They also have no down payment requirement.

These loans aren’t for everyone given their strict location requirements, but if you’re looking to buy in an eligible area, they can be appealing due to their lower upfront and annual mortgage insurance, called a USDA guarantee fee.

VA loan

The VA loan program⁴ is a loan program managed by Veterans Affairs as a benefit for servicemembers, veterans, and surviving spouses. You won’t be able to qualify for one of these loans unless you’re a member of one of those qualifying classes, but if you Are eligible, VA loans have many advantages that make them worth considering.

For example, VA loans have no down payment requirement and low closing costs. Credit requirements are also less strict than for most mortgage programs, making them easier to qualify for.

The bottom line: Most people can only get one FHA loan, but there are alternatives

While you can qualify for two FHA mortgages at once, that’s the exception to the FHA loan rule. In most cases, you can’t have two FHA loans at the same time. Most people can consider alternatives such as conventional loans or other specialized loan programs.

If you’re interested in an FHA loan or another type of home mortgage, you can reach out to Rocket Mortgage and start a new loan application today.

¹To qualify for this offer, you must meet all standard FHA eligibility requirements. In addition, your total mortgage payment, including taxes and insurance, cannot exceed 38% of your income, your debt-to-income (DTI) ratio cannot exceed 45%, and you must have 12 months of verifiable housing history immediately prior to your application, no late payments 30 days or greater in the last 12-months, and no derogatory marks on your credit report. Not available on jumbo loans. Asset statements may be needed, no more than 1 day of non-sufficient fund fees are allowed in the most recent 2 months prior to application. Additional restrictions/conditions may apply.

²The 3% down payment option is only available on certain conventional loan products and is not available in all states. Additional terms and conditions may apply.

³Client will receive a 1 point (1.000) loan level price adjustment (LLPA) credit on HomeReady and Home Possible purchase loans locked on or after January 2, 2024. One point (1.000) is equal to 1% of the loan amount. Minimum credit amount will be $2,000. Maximum loan amount is $350,000. Offer is not available with any other discounts or promotions. Offer cannot be retroactively applied to previously closed loans or loans already in process; offer is not transferable. Rocket Mortgage reserves the right to cancel/modify this offer at any time. Additional restrictions/conditions may apply. This is not a commitment to lend.

⁴Rocket Mortgage is a VA approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.