Can I Get an FHA Loan for a Second Home?
👉 Jump to section: Who's allowed to get a second FHA loan | Buying your FHA second home | What counts as a second home? | Summary | FAQs |
Yes, you can get an FHA loan for a second home if your purchase is because of an “undue hardship,” such as getting a job that’s over 100 miles from your current house or outgrowing your current house.
You can’t get a second FHA loan for a vacation home, timeshare, or investment property.
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How you can get an FHA loan for a second home
You can get a second loan from the Federal Housing Administration (FHA) if you're:
🚗 Relocating for a new job that’s more than 100 miles from your primary residence |
👪 Adding legal dependents and need a bigger home |
🏠 Leaving a home you owned with others and now looking for your own home |
🖊 A coborrower on someone else's loan but now looking for your own home |
Relocation
If you need to work on-site at least 100 miles from your home, the FHA may approve a second loan application.
It doesn’t have to be a job that you work year-round. It can be seasonal employment or a property near one of your primary clients. As long as you can show that work motivates your purchase, the FHA will likely approve your loan application.
In some instances, the FHA may allow you to rent out your primary or secondary home when you’re not using them. Just be careful — if there's suspicion you’re trying to buy a rental property, your application will likely get denied.
🏗 Does your new job have to be more than 100 miles away? In most cases, yes. The FHA may allow exceptions for commutes that pass through heavy-traffic areas. |
Increase in family size
If you’ve added members to your household, and you’ve outgrown your primary residence, the FHA may let you get financing for a secondary home. You must have paid down your current mortgage to at least 75% of your home’s appraised value to get approved.
Added family members must be legal dependents. So if your retired parents want to live with you and help take care of their grandchildren, you’ll likely have a hard time convincing the FHA this is an “undue hardship.”
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Vacating a jointly owned property
In most scenarios, the FHA will allow you to get a second FHA loan if you decide to move out of a primary residence you owned with someone else, even if the other borrowers stay.
Borrowers who leave should have no intention of returning. For instance:
- You may have bought a house with friends or family members, but now you’d like a place of your own.
- You could be going through a divorce and are planning to buy your new primary residence.
In these scenarios, you can get a second FHA loan even if you stop payments on the first.
Non-occupying coborrower
Non-occupying borrowers — that is, coborrowers who are contributing to mortgage payments of an FHA-funded property but don't live there — can apply for a second FHA loan. As long as you’re not living in the first home, you should have no problems getting an FHA loan for the second.
» MORE: Coborrower vs. cosigner on FHA loan: What’s the difference?
What do you need for an FHA second home?
📎 Proof that you meet policy exemptions. The FHA wants to be absolutely sure that you’re not buying a second property for investment or recreational purposes. They will ask you to provide documentation to support your reasons for your second home.
💰 A minimum 15% down payment. You can borrow up to 85% of the home’s appraised value. That means, you’ll have to pay at least 15% of the purchase price on your secondary home.
💸 Debt-to-income ratio of at least 43%. If you’re still making mortgage payments on your primary residence, you’ll include those in your DTI. This is in addition to the mortgage payments you plan to make on your secondary home.
🏦 A minimum credit score of 580. Additionally, you can’t have any recent bankruptcies or foreclosures.
Primary residence vs. secondary home
The FHA considers a "primary residence" (or "principal residence") to be the home you live in for the majority of the year, while a "secondary residence" is a house that you plan to live in for a portion of the year. Neither can be an investment or vacation property.
Typically, FHA loans are to fund a primary residence purchase. So if you meet one of the criteria for a second loan, the expectation is that this new home will become your primary residence.
(Use our FHA loan calculator here.)
Buying a second home with another lender
If you don't meet the FHA's requirements, you can get a secondary home with a conventional 15- or 30-year mortgage. But the residence definitions vary by lender, as do requirements.
Lending requirement | Conventional loan | Fannie Mae–backed loan | |
|---|---|---|---|
Minimum down payment | 25% | 10% | 10% |
Minimum credit score | 640 | 680 | 620 |
Maximum debt-to-income ratio | 45% | ||
To get a secondary home with a conventional mortgage you’ll need:
- Minimum down payment of 10%
- Minimum credit score of 680 — you might get away with a credit score between 640 and 679 if you have a down payment of 25% or more
- Debt-to-income ratio of 45% or less
Unlike conventional mortgages, you can rent out your secondary home with a Fannie Mae loan, but you can’t use the rental income as a qualifying factor in your application.
To get a Fannie Mae loan for a second home, you need:
- Minimum down payment of 10%
- Minimum credit score of 620
- Debt-to-income ratio of 45% or less
Summary
- You can get a FHA loan for a second home if you take a job that’s 100 miles from your primary residence, outgrow your current home, vacate a jointly owned property, or you’re a non-occupying borrower who’s looking to buy a house.
- To get a second FHA loan, you should have a 15% down payment, credit score of 580 or higher, and a DTI that’s under 43%.
- You can’t use an FHA loan for investment properties, vacation homes, or timeshares.