FHA loans aren't just for first-time homebuyers. There are many situations where an FHA mortgage might be right for you. Here are a few of them.
An FHA loan is often thought of as “the first-time homebuyer loan,” and for good reason! It was designed for first-timers who may not be able to purchase a home using other mortgage programs. But there are several types of homes eligible for an FHA mortgage.
The FHA loan program has some nuance to it. If you’re looking for a specific answer regarding your eligibility, it’s best to talk with an experienced mortgage adviser. Start with our easy questionnaire to see if your type of home qualifies for an FHA mortgage!
1. An investment property (kind of)
You can rent out a home purchased with an FHA loan. But you must move into the home within 60 days of securing the loan and then live in it as your primary residence for 12 months. Vacation homes are never eligible for an FHA loan since the program was designed to encourage primary homeownership.
Don’t like the idea of living with your renters? Check out number #2 in this list.
An FHA loan cannot be used only as an investment property, but you can certainly make money with it.
2. Condos and duplexes
Certain condos and duplexes are eligible for an FHA loan. You can check which condos are eligible with this useful condo search tool from HUD.
Condos can be one of the best types of homes eligible for an FHA mortgage if you want to make some money by renting out part of the property. Separate living spaces will still give you the sense that you have a place all to yourself.
FHA-eligible condos need to contain at least 2 units. Units can be detached, they can have elevators, and can be walk-up, mid-, or high-rise.
3. A second home
There are rare instances when you can buy a second FHA-insured home. However, your reason for doing so has to be outlined in HUD 4000.1.
- Your job requires you to relocate
- Your family grew and your property now “fails to meet family needs”
- The loan-to-value ratio on your current home is equal to or less than 75%
- You co-signed on an FHA loan to help get approval for a home you don’t occupy
- You got divorced and no longer live in the home that you bought with your spouse
4. Your first home
Of all the types of homes eligible for an FHA mortgage, a first home is the most common use of the program. Many of our borrowers select this program during their first home purchase.
For these reasons, the program is very popular with first-timers.
- It requires a smaller down payment amount of only 3.5%
- You can get approved with a credit score as low as 580
- It offers a competitive interest rate
Find out if your home is eligible for an FHA mortgage
We get it. Mortgages can be complicated. Take the simple route and work with The Wood Group of Fairway Mortgage. Let a mortgage adviser will help you discover if your type of home is eligible for an FHA mortgage.