Can I Get an FHA Loan for a Second Home?

Written by Steven PorrelloSeptember 14th, 20225 minute read

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.

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%

Most lenders define a secondary home as a single-family house that you plan to live in for at least 14 days a year. These can be vacation homes, but in most cases they can’t be investment properties, rentals, or timeshares.

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

Fannie Mae will allow you to borrow money to purchase a secondary home. They consider a second home to be a single-family house that you occupy for at least 14 days in a year.

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.

FAQs

In the FHA’s eyes, a secondary residence is a house that you plan to live in for a portion of the year. You have complete control over this home, and you don’t plan to use it as an investment or vacation property.

If you’re planning to buy a primary residence, then, yes, you can use an FHA loan to buy a home, even if you own a home right now. But if you want to buy a secondary home, you must fall into a qualifying scenario.

Under normal circumstances, the FHA requires you to live in your primary residence for at least one year after getting your FHA loan. After one year, you don’t have to live in the home anymore.