Two FHA Loans Can Be Better Than One

Hey all you Realtors out there…I think you know I’ve always had a great deal of respect for how difficult your job is. You really bear the lion’s share of responsibility for getting a real estate transaction underway:

§ You unravel client wish lists to ascertain what they’re really saying

§ You conduct comprehensive searches to come up with a selection of properties that meet all the criteria

§ You negotiate prices and repairs

§ You draw up contracts that protect your client and uphold the laws of the state AND you keep a vigilant eye on the drop dead dates so the time sensitive terms get accomplished

§ You even act as a part-time counselor/psychologist as you become immersed in the buyer’s family dynamics and drama

You guys contend with this impressive To Do List all the while keeping your client informed and making sure that everyone from the lender to the insurance company to the home inspector has everything they need to get their jobs done.

And besides all that…you are expected to keep up with my crazy industry and all the changes that keep it spinning.

With that being said, here’s some information about FHA loans – I get this question frequently so I thought it would offer some helpful insight. Basically, there’s a misconception that buyers can hold more than one FHA loan at a time. The answer is: They can. If one of your buyers has:

§ Limited down payment funds

§ Gift funds from family for their down payment

§ Credit scores that don’t qualify them for conventional financing

…then you know they are in FHA territory. If their current home is FHA-financed and they require the same mortgage type for their new home, there are circumstances under which they will qualify for a second FHA mortgage.

And here they are…

§ Relocation – they must document an unreasonable commute from current home

§ Increase in Family Size – must have current mortgage balance at or below 75% LTV

§ Vacating a Jointly Owned Property – a divorce situation for example

§ Non-Occupying Co-Borrower – Co-signed with family on their home

At the end of the day, your client still of course needs to financially qualify for two mortgages. And as with everything else in our world, they need to provide all the pertinent documentation per the individual lender’s specifications. Bottom line, this multi-FHA mortgage can really work to your client’s advantage.

As always, never hesitate to call if you have any questions about this opportunity in particular or anything about mortgage products and qualifications.

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