Century 21 Rivera Realty
Office: 856.404.9260, ext. 198
1. If you plan on holding two FHA loans, you can by proving that your family has outgrown the current property.
2. If you plan on offsetting the current housing expense on the property you are renting, to allow you to qualify for the new FHA loan, you will need to prove that you have at least 25% equity in that property. Two ways to do this: if for some reason you have prepaid on your loan and the balance is <=75% of the original loan balance (very unlikely at 10 year mark assuming you put 3% down, which was the minimum down payment requirement 10 years ago - now 3.5% OR get an appraisal done on the property and hope that the loan balance / appraised value is <=75%. You will need to pay for the appraisal and I would check with the lender on the new loan to see if they need to choose the appraiser before you go out and get it done.
You could always refinance the existing property into a non-FHA loan before you look into purchasing the new property to avoid the dual FHA loan issue all together, but you will need to buy the new property with FHA financing because FHA does not require a 2 year history of rental income like Fannie and Freddie (conventional lending). FHA will allow you to use future rent to qualify with a signed lease and at least one month of rent received (down payment, first month's rent, etc).
Lenders may add additional underwriting overlays (higher restrictions above and beyond the standard FHA underwriting guidelines), so don't just assume that you read it here and you are good to go. You need to decide on a good mortgage banker and have a detailed discussion with them around this and have them construct the deal and run it through a preliminary underwrite before you start signing contracts.
I can help you if you'd like. I can write loans in 50 states with JPMorgan Chase. I can also issue you a pre-approval through our Home Buyer Advantage (HBA) program. This would be at no cost to you and would be a full underwrite on a loan before you even found a property. That way you know what you qualify for prior to shopping for something out of your price range. This is not a pre-qual, which we and any other bank will do. A pre-qual does not go to an underwriter for full approval, it is issued after your data is run through an automated underwriting engine. Pre-quals are good b/c they are quick, but pre-approvals are better b/c not only do you know exactly what you are qualified for, you can also use this as a negotiation tool. Who do you think the seller would want to sell to, the guy that has the bank committing to lend with a full underwrite, or the guy with the pre-qual letter?
If you'd like help please reach out to me.