FHA, second home due to space requirements, working from home?

[Anonymous]

Hi everyone,

According to FHA rules, a second home is possible if you have a new dependent and it fails to meet the needs.  So since last March/2020, my wife and I have started working from home.  And BTW, we did have a child since our original FHA loan (2013).  We both work from home, and kids are home schooled.  Our home is fairly cramped, my 'office' is now the dining room, which is also a pre-k.  We do need a slightly larger home that would better suit our needs.  

I'm interseted in an FHA loan.

Ideally, we buy a new house, we list & sell the current house (we're in a good market) , we apply a portion of equity as a mortgage restatement on the new house to get it out of PMI.

My question is would FHA take space into consideration with employment changes? We do have a 'new' dependent, I'm not sure if that's all they'll look at.

Thanks everyone!

[dragontears]

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@Anonymous wrote:

Hi everyone,

According to FHA rules, a second home is possible if you have a new dependent and it fails to meet the needs.  So since last March/2020, my wife and I have started working from home.  And BTW, we did have a child since our original FHA loan (2013).  We both work from home, and kids are home schooled.  Our home is fairly cramped, my 'office' is now the dining room, which is also a pre-k.  We do need a slightly larger home that would better suit our needs.  

I'm interseted in an FHA loan.

Ideally, we buy a new house, we list & sell the current house (we're in a good market) , we apply a portion of equity as a mortgage restatement on the new house to get it out of PMI.

My question is would FHA take space into consideration with employment changes? We do have a 'new' dependent, I'm not sure if that's all they'll look at.

Thanks everyone!

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Can your DTI support 2 mortgages? If not, you will need to list your current home and close on it's sale before the closing of a new mortgage (you can get preapproved and make offers with a contingency of selling your current house).

[Anonymous]

Thanks for the reply, I just used the wells fargo DTI calc, it shows at 17%

My credit score is 627

- I have a few charge offs, I just settled on two, the other two will be settled in 60days.

[Harriet]

Sounds like you would qualify but I'm not a mortgage professional. From what I have read about pmi you'll be paying it for 11 years even with over 20% equity.  It would be better to use those fund to boost your credit and refi into a conventional loan.  

[JVille]

Your Credit Score is an issue. Is that a Mortgage Score or Fico 8 and us it the Lowest middle score if all borrowers. Yes Collections and Charge Offs tank scores. You have work to do.

[VALoanMaster]

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@Anonymous wrote:

Hi everyone,

According to FHA rules, a second home is possible if you have a new dependent and it fails to meet the needs.  So since last March/2020, my wife and I have started working from home.  And BTW, we did have a child since our original FHA loan (2013).  We both work from home, and kids are home schooled.  Our home is fairly cramped, my 'office' is now the dining room, which is also a pre-k.  We do need a slightly larger home that would better suit our needs.  

I'm interseted in an FHA loan.

Ideally, we buy a new house, we list & sell the current house (we're in a good market) , we apply a portion of equity as a mortgage restatement on the new house to get it out of PMI.

My question is would FHA take space into consideration with employment changes? We do have a 'new' dependent, I'm not sure if that's all they'll look at.

Thanks everyone!

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Hi @Anonymous,

While it is technically possible to have 2 FHA mortgages out at the same time, it is very difficult to get approved for it. The #1 issue is you must have 25% equity in your current home and then you have to qualify under FHA's exemption for an increase in family size. 

You are better off setting yourself up with a pre-approval that is contingent on the sale of your current home.

You can go under contract using the same contingency and actually do your closings back to back.