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Buying a 2nd Home w/ FHA

My husband and I currently own a home with a traditional 30 year fixed rate mortgage.  We are looking to downsize and purchase a townhouse.  We are considering going with FHA.  Will FHA allow us to purchase a second home to be used as our primary residence?  Due to unforeseen circumstances, a family member has moved in with us and we will be renting our current home to him.  We have never missed a payment on our current mortgage (or the mortgage prior to that), but we do owe more on our current home than it currently appraises.
  • March 29 2012 - Jacksonville
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Answers (6)

Sounds like you should be fine from what you explained.  Your current home mortgage is not an FHA loan, is it?

All the best,
Ros

Roswell Moore, CMPS
Certified Mortgage Planner
  • March 29 2012
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You would need to qualify for the new FHA loan with counting current house payment and new house payment as rental income would not be counted.  Current loan would need to be a conventional loan,
  • March 29 2012
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zoobteach - based on your scenario, you're not disqualified from using FHA, but you may encounter an occupancy issue if the new home is smaller than your current one...

Rentals should be considered inferior (size isn't the only factor, but a major one) to your primary....if not, then the underwriter most likely will counter your new purchase as a rental, requiring 20% down...

Let me know if I can provide any more details for you!

Best, Jeff M
  • April 01 2012
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Profile picture for atph
Hi,

I am in a similar situation. Can anyone let me know the pros/cons of using FHA instead of a conventional loan?
  • January 18 2013
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We should be able to help you with an FHA loan purchasing your new home.  Furthermore if your current home is upside down we may be able to lower your rates through the HARP 2.0 program. We are a non-profit company which enables us to keep our rates and fees low.
  • January 18 2013
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If you are looking into a new FHA loan, you will need to income qualify for BOTH house payments in order to get another FHA loan.
  • January 28 2013
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