Let’s say you are retiring and want to downgrade to a smaller home or condo in a warmer area, or you have a PCS order from the military and your family needs to move.
If you have used a federal home loan program before, will you be able to use it again? This is something consumers definitely want to know. Although homes financed with a Federal home loan can be paid off early with no penalty fee, under certain circumstances, a borrower may be able to get a new federal home loan while keeping the home originally financed.
This article will explore all of your possibilities to utilize federal home loans more than once!
USDA HOME LOANS
If you have paid off a USDA home loan on the previous residence, you are absolutely able to use the USDA home loan benefit again. There are certain exceptions, as well.
You may not own additional property as an investment or vacation home under the USDA home loan. A USDA borrower may keep a previous dwelling and fund a new one, especially if they financially can afford the second home, and under life circumstance guidelines.
If your living situation with a current USDA funded home is found to be not adequate, with examples including a new disability falling upon you or growth of family (not counting adoption) overcrowds the home, then this is a sound reason. Having to relocate for work will also qualify.
If you are not able to afford both homes, the USDA home loan can also be assumed by another qualifying borrower, so this is a great option if you need to change homes due to familial and life situations. Another option is that a co-applicant or co-borrower (not a co-signer) would be able to occupy the previous dwelling, especially if it is still being paid off, waiting to be assumed by another party, or waiting for the home to be sold.
A separate piece will explain how soon you will be eligible to obtain a second USDA home loan after a short sale, bankruptcy or foreclosure. You may also ask one of our qualified reps via the chat feature on this site, or call 877-432-5626(LOAN).
FHA HOME LOANS
You will be able to use an FHA home loan more than once. If the previous FHA home loan is paid off, whether it is while you are occupying the home or you sell it in order to pay off the mortgage, you will be eligible for another FHA home loan. The second FHA mortgage may be pursued after 12 months of on-time payments occurred with the first loan, especially since you will legally have to occupy that previous property for a year.
You may also have multiple FHA loans if you have a need for a larger or smaller home, or if you will move to a different area. Examples of this include a relocation for work that is considered to be a long distance from the first property financed with an FHA loan. Other eligible reasons include a family size increase that exceeds resources of home size (does not include adoption), or leaving a mutually owned home because of a divorce.
As with the USDA loan, you must occupy as the new home primary residence that is being insured by the FHA through HUD, and you may not use the loan for an investment property or holiday home.
When you are ready to pay off the previous FHA home loan, there is no penalty if it is being paid off earlier than the scheduled end date. The FHA home loan may also be assumable on the previous property you want to part ways with.
For information on how soon after a short sale and other financial hardships you can obtain a new FHA home loan, stay tuned for our next piece, or call 877-432-5626(LOAN).
VA HOME LOANS
Veterans, active duty, and qualifying surviving spouses are allowed to use the VA home loan multiple times. You can even sometimes hold two VA home loans at once, pending on the county and how much of your previous eligibility you used on the first property. The best time to use multiple VA home loans are if the previous VA home loan is paid off or the property that is currently funded is assumed by another qualifying party.
One of the best parts about the VA home loan is how understanding the VA is to the changes that a military family experiences. If a veteran and their family need to move to another home due to downsizing or a PCS they can take part in a compromise sale if they can’t afford mortgage payments on two properties.
The best part is that immediately after a compromise sale is, as long as all payments were current before the sale was closed, the additional VA home loan can be applied for ASAP! We will be publishing another piece on the subjects of payments up until the time of the compromise sale not being current, or a military family experiencing other financial hardships.
Call our office at 877-432-5626(LOAN) for information on any federal home loan. We can help you locate and fund your dream home, as well as assist with short sales and refinancing. Swing over to Twitter and follow us at @fedhomeloan, too!