FHA exceptions for multiple FHA loans

FHA exceptions for multiple FHA loans

Policy Exceptions
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
  1. relocating, and
  2. establishing residency in an area outside reasonable commuting distance from his/her current principal residence.
If the borrower subsequently returns to the area where he/she owns
a property with an FHA-insured mortgage, he/she is not required to
re-establish primary residency in that property in order to be
eligible for another FHA-insured mortgage.

Note: The relocation need not be employer-mandated to qualify for this exception. 
Increase in family size
A borrower may be eligible for another home with an FHA-insured mortgage if the number of his/her legal dependents increases to the point that the present house no longer meets  the family’s needs.

The borrower must provide satisfactory evidence
  1. of the increase in dependents and the property’s failure to meet family needs,
  2. and that the Loan-To-Value (LTV) ratio equals 75% or less, based on the outstanding mortgage balance and a current appraisal. If not, the borrower must pay the loan down to 75% LTV or less.
Note: A current residential appraisal must be used to determine LTV compliance. Tax assessments and market analyses by real estate brokers are not acceptable proof of LTV compliance.
Vacating a jointly owned property
A borrower may be eligible for another FHA-insured mortgage if he/she is vacating a residence that will remain occupied by a coborrower.

Example: A couple is divorcing and the vacating ex-spouse will purchase a new home
Non-occupying coborrower
A borrower may be qualified for an FHA-insured mortgage on his/her own principal residence even if he/she is a non-occupying coborrower with a joint interest in a property being purchased by other family members as their principal residence with an FHA-insured mortgage.

Important: Under no circumstances may investors use the exceptions described in the table above to circumvent FHA’s ban on loans to private investors and acquire rental properties through purportedly purchasing “principal residences.”

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