FHA will not insure more than one Property as a Principal Residence for any Borrower, except as noted below. FHA will not insure a Mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining Investment Properties, even if the Property to be insured will be the only one owned using FHA mortgage insurance.
Properties previously acquired as Investment Properties are not subject to these restrictions.
Listed below are the only circumstances in which a Borrower with an existing FHA-insured Mortgage for a Principal Residence may obtain an additional FHA-insured Mortgage on a new Principal Residence:
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
- 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:
- 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 another FHA-insured Mortgage on a new Property to be their own Principal Residence.
A Borrower with an existing FHA-insured Mortgage on their own Principal Residence may qualify as a non-occupying co-Borrower on other FHA-insured Mortgages.
For additional information see Handbook 4000.1 Section II.A.1.b.iii.(A)(2) available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh