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Can I get an FHA loan for a second home? Second home guidelines

The
FHA loans
are intended for a buyer’s primary residence. The FHA does not allow
the FHA loan to be used for a vacation or investment homes (although,
years ago, the FHA permitted investor loans – not now).

There are some exceptions to the one loan policy. You may qualify
for an FHA loan on a second home if you meet one of the FHA hardship
exemptions.

Policy Exceptions  FHA Second Home Loan Eligibility Requirements

Relocation

A Borrower may be eligible to obtain another FHA-insured
Mortgage without being required to sell an existing Property
covered by an FHA-insured Mortgage if the Borrower is: relocating
or has relocated for an employment-related reason; and „h
establishing or has established a new Principal Residence
in an area more than 100 miles from the Borrower¡¦s current
Principal Residence. If the Borrower moves back to the original
area, the Borrower is not required to live in the original
house and may obtain a new FHA-insured Mortgage on a new
Principal Residence, provided the relocation meets the two
requirements above.

Increase in family size

A Borrower may be eligible for another house with an
FHA-insured Mortgage if the Borrower provides satisfactory
evidence that: „h the Borrower has had an increase in legal
dependents and the Property now fails to meet family needs;
and the Loan-to-Value (LTV) ratio on the current Principal
Residence is equal to or less than 75% or is paid down to
that amount, based on the outstanding Mortgage balance and
a current residential appraisal.

Vacating a jointly-owned Property

A Borrower may be eligible for another FHA-insured Mortgage
if the Borrower is vacating (with no intent to return) the
Principal Residence which will remain occupied by an existing
co-Borrower.

Non-occupying co-Borrower

A non-occupying co-Borrower on an existing FHA-insured
Mortgage may qualify for an FHA-insured Mortgage on a new
Property to be their own Principal Residence. SOURCE:
Handbook 4000.1 Last Revised: 12/30/2016 (page 141)
Read about:   What Happens When Interest Rates Go Up

Second home loans are only permitted with written approval from
the area FHA office after a determination that:

  • the Borrower has no other Secondary Residence;
  • the second home will not be a vacation home or be used primarily

    for recreational purposes;
  • the commuting distance to the Borrower’s workplace creates
    an
    undue hardship on the Borrower and there is no affordable rental

    housing meeting the Borrower’s needs within 100 miles of the

    Borrower’s workplace; and
  • the maximum mortgage amount is 85 percent of the lesser
    of the
    appraised value or sales price. That means a 15% down payment.

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