FHA Lending Rules on Second Home Purchases

FHA Lending Rules on Second Home Purchases


A Second Home or Secondary Residence, as FHA (Federal Housing Administration) refers to them, is a home that  a Homeowner will occupy for a part of the year.  It is not considered a full time residence.   In addition to the property, FHA will FHA Lending Rules on Second Home Purchasesconsider the buyer’s primary residence when a home buyer is looking to finance a second home purchase.  Let’s look at what the rules and regulations are to get a FHA loan on a second home…

In essence and according to the FHA, the Homeowner  has two residences.

FHA is only a Primary Residence Loan Product, and not generally thought of as a possible

loan product for a Secondary Residence.  But under particular circumstances FHA will allow for

one Secondary Residence per homeowner.  However, it is important  to remember that a secondary home can not be an investment or vacation home.  In order to qualify the special circumstances is if the Borrower can demonstrate a hardship

as follows:

• The Borrower/Family is unable to find affordable rental housing which meets their needs. The

Borrower will need to provide documentation to support his/her claim that there is a lack of

affordable rental housing in the area they want to purchase the second home.

• The Primary Residence is not within reasonable commuting distance from work.

• The Loan Amount on the Secondary Residence, will not be higher than 85% Loan-To-Value (LTV) or the lesser of the appraised value or sales price of the property.

• The property MUST NOT be a vacation home or be used primarily for recreational purposes.

• The Borrower requires a Secondary Residence because of:

o Seasonal employment, or

o Employment relocation


Approval for a special exception for a Secondary Residence cannot be granted by a Lender’s Direct

Endorsed Underwriter (DE).  An exception can only be granted by the Lender submitting a request on

behalf of the Borrower to the Local FHA Office in writing.

Does FHA Allow For Secondary Residences?  Yes they do, with the caveat of meeting the above conditions.  So really the answer is Yes…and No.   FHA Lending Rules on Second Home Purchases.


Info about my guest author:  George Souto NMLS# 65149 is a Mortgage Loan Originator who can assist you with all your FHA, FHA lending practices on second home purchasesCHFA, and Conventional #mortgage needs in Connecticut. George resides in Middlesex County Connecticut. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com. I am pleased to have George be a guest contributor to my web site with his wealth of mortgage knowledge.  He is an expert on mortgages and lending practices and is a great resource for all real estate agents.


Ginny Lacey Gorman is your go to Rhode Island waterfront real estate listing agent for North Kingstown RI real estate and beyond…knowing the geographic area, schools, happenings and important tidbits of local information.  Email her at ginny@RIHouseHunt.com to make an appointment to find the home of your dreams too!
Waterfront, oceanfront, luxury and coastal Rhode Island real estate are my specialty but all of RI is my backyard.  When you are in need of a real estate specialist for your buying, selling or relocating needs and an internet savvy marketer who sells houses in this real estate market call Ginny at 401.529.7849.