Financing in Canton>Question Details

Dayspring, Home Buyer in Canton, MI

Can I use FHA financing to purchurse a second home?

Asked by Dayspring, Canton, MI Sun Jan 24, 2010

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Hi, Dayspring

If your first home has a conventional mortgage on it, or free and clear, and the second home will be your new primary residence, you're fine.

If your current home has a FHA mortgage on it and your looking to purchase a new primary residence with FHA financing, guidelines are as follow:

1.) Purchase must be due to a job relocation that would otherwise require you to commute over 50 miles one way.

2.) Change in family size: Your family has now outgrown your current home, or you're now an empty nester and looking to downsize into something smaller and less maintenance and/or stairs (i.e. going from a 4 bedroom to a 2 bedroom. Going from a large colonial to a smaller ranch.)

3.) If you don't have enough income to qualify with both mortgages: In order to use a lease agreement to show additional income on paper to wash out old home's mortgage payment and/or gain additional income you need 25% equity in home or to have paid down the original loan amount by at least 25%. (The latter would require an appraiser to do a rent roll/schedule to verify avaergage rental rate in area, but no appraisal would be necessary.) The former/first will require a full appraisal to verify the 25% equity.

If you need further assistance, please feel free to contact me at your convenience.

Rudy R. McDowell/Senior Loan Officer
NMLS#: 141856
Shore Mortgage
770 S Adams Brimingham, MI. 48009
O: 800-678-6663 Ext 5154 / F: 248-594-6156 / D: 313-410-1344
email: rmcdowell@shoremortgage.com
corp: http://www.shoremortgage.com
"Referrals are the Best Indicators of My Service and Your Satisfaction ."
0 votes Thank Flag Link Tue Jan 26, 2010
Dayspring if you intend to buy the second home as your new primary residence and you plan to rent out your current home their are new guidelines in terms of using rental income to qualify for your new FHA loan.
If you need to use rental income from the property you are leaving to qualify to buy your new home then you will need to have 25% equity in that home to use a FHA insured loan to purchase a new primary residence.
0 votes Thank Flag Link Mon Jan 25, 2010
If you mean a "Second Home" in that it will be like a vacation home, then the answer is "no". If you mean to buy a NEW primary residence and convert the old home as a second home or rental, yes.
0 votes Thank Flag Link Sun Jan 24, 2010
Yes, if you're going to use it as primary and if your current home does not have an FHA loan. You can only have one FHA loan. There are some soon-to-Be New FHA Guidelines, so if you're thinking about getting an FHA loan, you might want to do it now before the guidelines change.

Here's the condensed version:

1. UFMIP will be increased from 1.75% to 2.25%. The change to occur in spring 2010.
2. Update the combination of FICO scores and LTV maximum:
FICOs less than 580 will see down payment requirements increase to 10%
This change will be announced in the Federal Register for comment
3. Seller contributions will be reduced from 6% to 3% to conform to the conventional market.
4. Increase audits on FHA lenders

Plus, our government even added another level of credit for those homeowners who have been in their current home at least 5 of the last 8 years. If they decide to buy a house, they will receive a $6,500 tax credit. (Some restrictions apply)

Hope this information is helpful
0 votes Thank Flag Link Sun Jan 24, 2010
Yes, if you're going to use it as primary and also that your 1st home isn't a FHA loan.
You can only have one FHA loan.
0 votes Thank Flag Link Sun Jan 24, 2010
Not unless the 2nd home will be your primary residence.
Web Reference: http://macombhomes.com
0 votes Thank Flag Link Sun Jan 24, 2010
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