Qualifying For A Mortgage With 2 Primary Residences
Upon applying to finance a property, you will need to let the lender know if the house is going to be your primary residence, an investment or rental, or a vacation property. This is part of deciding whether you will be qualified for a mortgage or note. The property’s status matters since rentals and second homes are much riskier to finance. On top of that, many loans backed by the government don’t allow rental properties or second homes.
So, what happens if you have 2 primary residences? Will you be able to finance these two as primary residences? Well, it will depend. Lenders can resolve these problems on a case to case basis wherein they will check several variables, which include the following:
- Work – Is your job the reason behind the need for 2 primary residences?
- Distances – How far are the two houses from each other?
- Family – Does your family grow big to the point that an extra house became a necessity and not a luxury? Or do you have a dependent that you are buying the property for?
The United States Department of Housing and Urban Development or HUD which is responsible for administering the FHA mortgage program is very clear. The FHA is not going to insure a mortgage when it has been determined that the transaction was made to use the FHA mortgage insurance as a form of vehicle to obtain investment properties, even when the property that will be insured is the only one owned that will use the FHA mortgage insurance.
Below are the instances in which the HUD let buyers have 2 primary residences:
Increase in Size of Family
You could be eligible for 2nd primary residence when your family has gotten so much bigger for your present house, and the LTV or loan to value ratio is 75% or lower. It is helpful when you move in other members of the family to share expenses or when you have to care for children, grandchildren, or aging parents. You can also buy a house for your parent or dependent child as a primary residence with FHA Kiddie Condo program.
You can get an FHA-insured mortgage with no need to sell your old house. You have to relocate for a minimum of 100 miles, with the relocation having to be related to the job.
For example, you can work from your hometown office or at the headquarters of your company in a different state. When you purchase a house near your other office, you might be allowed to finance this new property as your primary residence.
When you happen to be a non-occupying co-borrower on the primary residence of another person, you will still be able to finance your very own primary residence. But, co-borrowing can create what lenders refer to as contingent liability. This means that some circumstances might make you responsible for that property’s payment. Once the occupying co-borrower didn’t make the mortgage payments, you will be the one to pay them.
You could become eligible for a second primary residence mortgage when you leave your present house for good yet the co-borrower on that loan choose to stay living in the house. it is ideal for that person to refinance and remove you from the loan as a whole, although this is not possible all the time.