Question Details

Amber, Other/Just Looking in San Diego, CA

Buy a second home?

Asked by Amber, San Diego, CA Thu May 22, 2008

I have an FHA loan on my condo and its WAY upside down. It has to be owner occupied so I can't rent it out. What I am considering is buying a second home. If I paid both mortgages my debt/income ratio would be less than 40%. The second home would be in a much more desirable location, better schools. What are the risks here?

Help the community by answering this question:


What do you mean when you say the loan is WAY upside down?
Are you having trouble making your payments and if so why are you looking to buy a second home?

You wont have any trouble with FHA if you lived in the condo for a while, FHA has this requirement because they do not want "Investors" to use their low interest rate low downpayment loans to purchase investment properties. The FHA loans are meant to provide housing for you to live in yourself, however if your situation changes and you need to rent it out or you choose to purchase another home and rent it out later. You should not run into any issues, to be sure ask your mortgage rep or attorney which you used for the purchase to be sure.

You are not going to get a mortgage with a 40% debt to income ratio and if someone offers you one, you will pay through the nose and still may not be able to actually get that loan funded. Don't you have any other expenses to live? Food, Cloths, Car, Insurance, etc.? You shouldn't be considering spreading your income so thin, I'd suggest speaking with a financial consultant for guidance.
0 votes Thank Flag Link Thu May 22, 2008
UPDATE: Amber here--I have applied for permission to rent out my current condo and it was denied. Must be owner occupied for the life of the loan. Even with my current mortgage, I can qualify to purchase another condo as a second home which I could either rent or occupy. I can afford both mortgages. Is this a bad idea? What are the drawbacks? I need an unbiased (not my own) opinion!
0 votes Thank Flag Link Thu May 22, 2008
It depends on how long you have lived in your current condo (insured by FHA). If you've met the time requirements you may be able to rent it and use the income from rent to help you qualify into your second home. It will also be much easier to finance your second home as an owner occupied property.
0 votes Thank Flag Link Thu May 22, 2008
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