September 25, 2014
A reader asks, “I currently have a 3 year old VA mortgage on my home. Will this disqualify me for a FHA loan on a second home?”
FHA loan rules state that the borrower must certify he or she will occupy the home to be purchased with an FHA mortgage as the primary residence. A borrower who purchased a home with a VA mortgage loan is also required to certify in such a manner, but if the applicant closes the deal on the VA loan, moves into the house and uses it as the primary residence, the occupancy requirement is considered fulfilled in the eyes of the VA.
The means that if the borrower is financially qualified for the FHA mortgage and can certify the new home will be the primary residence, the loan can proceed. Borrowers who have an existing home and wish to apply for an FHA mortgage will need to occupy the home purchased with an FHA loan as the primary residence because FHA single-family mortgage loans are not available for investment properties.
Borrowers may wish to consider how the first mortgage could affect the debt-to-income ratio calculation on the new loan. If you have other large lines of credit such as a car payment or other bills, you may need to plan on how to reduce your debt to income ratio.
Some borrowers may find pre-purchase counseling can be a big help in such areas. You can call the FHA to get a referral to an FHA/HUD approved housing counselor near you–contact the FHA directly at 1-800 CALL FHA.
Pre-purchase counseling can help borrowers with budgeting and credit strategies as well as getting an idea of what the FHA will expect from a loan applicant in order to get loan approval.
Do you have questions about FHA home loans or refinance loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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