Can you get an FHA loan for a second home?

FHA-secong-homeThe FHA loans are intended for a buyer's primary residence. The FHA does not allow the FHA loan to be used for a vacation or investment homes (although, years ago, the FHA permitted investor loans - not now).

There are some exceptions to the one loan policy. You may qualify for an FHA loan on a second home if you meet one of the FHA hardship exemptions.

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Policy Exceptions  FHA Second Home Loan 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: relocating or has relocated for an employment-related reason; and „h establishing or has established a new Principal Residence in an area more than 100 miles from the Borrower¡¦s current Principal Residence. If the Borrower moves back to the original area, the Borrower is not required to live in the original house and may obtain a new FHA-insured Mortgage on a new Principal Residence, provided the relocation meets the two requirements above.

Increase in family size

A Borrower may be eligible for another house with an FHA-insured Mortgage if the Borrower provides satisfactory evidence that: „h the Borrower has had an increase in legal dependents and the Property now fails to meet family needs; and the Loan-to-Value (LTV) ratio on the current Principal Residence is equal to or less than 75% or is paid down to that amount, based on the outstanding Mortgage balance and a current residential appraisal.

Vacating a jointly-owned Property

A Borrower may be eligible for another FHA-insured Mortgage if the Borrower is vacating (with no intent to return) the Principal Residence which will remain occupied by an existing co-Borrower.

Non-occupying co-Borrower

A non-occupying co-Borrower on an existing FHA-insured Mortgage may qualify for an FHA-insured Mortgage on a new Property to be their own Principal Residence. SOURCE: Handbook 4000.1 Last Revised: 12/30/2016 (page 141)

Second home loans are only permitted with written approval from the area FHA office after a determination that:

  • the Borrower has no other Secondary Residence;
  • the second home will not be a vacation home or be used primarily
    for recreational purposes;
  • the commuting distance to the Borrower’s workplace creates an
    undue hardship on the Borrower and there is no affordable rental
    housing meeting the Borrower’s needs within 100 miles of the
    Borrower’s workplace; and
  • the maximum mortgage amount is 85 percent of the lesser of the
    appraised value or sales price. That means a 15% down payment.