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Although first time homebuyers often take advantage of FHA home loans, the Federal Housing Administration is not solely limited to this category of borrower. FHA mortgages can be used by anyone who qualifies for them to purchase or refinance a home.

Are FHA Mortgages Only Available to First Time Homebuyers?

Why Are FHA Home Loans So Popular With First Time Buyers?

Some of the popular benefits of FHA home loans include low down payment requirements, competitively priced interest rates, and flexible credit underwriting methods. For potential buyers, low down payment requirements have become quite popular as buyers can obtain their first home more easily. Additionally, the consideration of non-traditional credit continues to be quite helpful to many first time home buyers who lack a sufficient traditional credit history. As a result, the ability to use rent history and utility bills makes it much easier for borrowers to meet FHA lender qualifications. But although first time home buyers make up a large percentage of home loans insured by the FHA, other borrowers are certainly not restricted from this government program.

FHA Home Loans and Principal Residency

The one significant requirement of the Federal Housing Administration is that FHA home loans are reserved for primary residences. HUD defines a principal residence as the property occupied by a borrower for the majority of the calendar year. Additionally, at least one of the borrowers on the FHA home loan must sign a security instrument stating he or she will establish the home as a principal residence within 60 days of signing, and continue this occupancy for at least one year.

Are There Any FHA Loan Restrictions I Should Be Aware Of?

Although still eligible in many cases, borrowers planning to step outside the boundary of single family programs, or principal residency, should review current FHA requirements with an approved mortgage lender. As previously mentioned, the FHA typically limits loans to a principal residency--essentially limiting one FHA loan to an individual borrower. Common exceptions for an additional FHA loan include a substantial increase in family size, vacating a jointly owned property, or cosigners with a non-occupying co-borrower status on another FHA mortgage. In all other cases, a borrower will not be eligible for a FHA loan unless the previous FHA home loan is paid off, or ownership of that residence is terminated.

Additionally, properties used for recreational purposes, or vacation homes are not eligible for an FHA home loan. The FHA also lays out specific guidelines for investors, but these are typically limited to entities interested in programs involving nonprofit organizations, rehabilitation programs, and multi-unit projects.

For more detailed information, contact a FHA-approved mortgage lender in your area, as requirements can vary by county and state. And while the limitations can seem daunting at first, these government-insured mortgages are typically available to most average buyers and homeowners in the market for a traditional mortgage.


Heindrick So
Heindrick So is a mortgage consultant at a local Bay Area Real Estate Brokerage--specializing in residential wholesale lending. Heindrick frequently contributes to various finance columns, ranging from home loans and mortgages, debt management, and other personal finance topics.