December 27, 2017
What are FHA house loans? Are they really only for first-time home buyers? There are many things about the FHA home loan program that are easily misunderstood. Let’s explore how FHA home loans can help you even if you are NOT a first-time home buyer.
FHA Home Loans: What They Are Designed To Do
FHA mortgages allow qualified borrowers to buy, refinance, and repair/rehab homes intended to be used as the buyer’s primary residence.
FHA mortgages include options for cash-out and no cash-out refinancing, and there are rehab loans, FHA fixer-upper loans, FHA construction loans, and several other options.
FHA loans can be used to buy suburban homes, condo units, mobile homes, manufactured homes, and modular homes. You can also apply for an FHA One-Time Close construction loan to have a home built for you from the ground up.
FHA Home Loans Are Not Only For First-Time Home Buyers
The myth is persistent; many still believe that FHA mortgages are only for the first-time home buyer or for people who do not currently own a home. But this is not true. FHA mortgages are for any financially qualified applicant with acceptable credit scores and reliable payment histories.
You do not have to be a first time buyer, and you are allowed to apply even if you already own property. The caveat here is that FHA mortgages are only for owner/occupiers.
You must intend to live in the home you buy with an FHA mortgage loan whether that’s an FHA One-Time Close construction loan, an FHA rehab loan, etc.
FHA Mortgages Have An Occupancy Requirement
If you already own property, you may continue to do so, but if you buy a home with an FHA mortgage you are required to occupy it as your main, permanent address usually within 60 days of loan closing.
Your other property cannot be used as your home address if you are buying another home with an FHA mortgage. You are allowed to purchase a 1-4 unit home, rent out any unused living units, but as a landlord you must occupy the property, too.
FHA Loans Are For Homes
FHA Single-Family home loans are for buildings classified as residential, or are primarily residential in nature. A mixed-use property can be legal nonconforming, but local laws, lender requirements and other rules may apply in addition to FHA loan requirements.
Talk to your lender about zoning and property types if you have concerns about how they may affect your transaction. FHA loan rules aren’t the only ones that will have a say in your loan.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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