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I already have an FHA. I have read about the rules for 2 FHA's (house not big to sustain existing family, commuting distance etc) but they dont apply to me.
Also would it be easier to refi my existing house to a conventional loan from FHA, what does this entail? Good or bad idea?
I have an FHA on a house that I converted to a investment property... Its a duplex. You can't have two FHA's. If you want a second home, it as to be a conventional mortgage or VA, or USDA. It can't be FHA because of the rules. Also, you have to have 6 months of PITI in reserves for BOTH properties or fannie mae / freddie mac won't buy back your mortgage from the original lender.
Sources: Closing soon on a 20 yr conventional mortgage with 5% down, currently own a duplex which was purchased in 2008 using FHA and 3% down.
The down payment requirement for the new house would depend on whether you were purchasing the new house to be used as a principle residence, and what are you going to do with the old house. If you convert old house to a rental, the down payment requirements are different than if you held onto it unoccupied. For more information go to Fannie Mae's Selling Guide. It will tell you the requirements to meet a fannie mae mortgage. Most lenders now want to sell the loan to fannie or freddie as soon as its closed but retain the servicing.
You can have 2 FHAs loan, in very specific circumstances. It can be done if you are relocating, had an increase in your family size, if you are vacating a jointly owned property or if you were the non-occupying co-borrower. In all these situations, there are certain LTV requirements that must be met before you can take out a second FHA loan. Other than these situations, no you cannot.
Thanks for the responses.
I was looking to buy a condo to rent out and make some $$ if possible (rental property). Looks like I will have to resort to the 5% down conventional.
All FHA financing must be used (at least originally) for owner occupied, primary residences.
@webhopper wrote:
The rental income is great! I make 2050 per month on my duplex and the mortgage is 1500. One thing you want to be clear on is this: investment property like what you are describing requires 30% down. If you plan on a 5% down payment, you will have to physically move there. If you don't move in, and claim it's for a principle residence in your mortgage app, that's called mortgage fraud. With FHA I had to meet the owner occupancy requirements, which I did. I lived in my duplex for 4 yrs. Another thing you want to consider is that you read the fine print on the condo association by laws to make sure rentals are allowed.
I'm a member of the American apartment owners association and there is a lot of good advice out there for would-be landlords. Check out their website, google is your friend! It's not just for apartment owners, many members only own one or two rentals, bit it's a great place to stay up on current laws and issues in the landlord / tenant relationship.
Oh great info, I will check it out. Thanks
@CS800 wrote:I already have an FHA. I have read about the rules for 2 FHA's (house not big to sustain existing family, commuting distance etc) but they dont apply to me.
Also would it be easier to refi my existing house to a conventional loan from FHA, what does this entail? Good or bad idea?
if you do not qualify for an exception..... then the only way to get another fha loan is to refi the current. but if you do not intend to occupy that property as a primary residence....(you mentioned buying another home with fha)..... you will have to refi into an investment loan.
with good credit, 5% down conventional might be your best option.