Primary residence mortgage loans have much more favorable terms than mortgage loans on second homes or investment properties. This is because lenders view homeowners as more likely to keep up with the mortgage on their primary residence during tough economic times than any other type of property. For that reason, lenders offer these loans with more competitive rates and terms.
But can you have two primary mortgage loans at the same time?
Typically the answer is no because you can’t live in two properties full-time at once, but there are some exceptions.
Understanding the Primary Residence
A primary residence is where you spend most of your time. It’s also where you tell the IRS you live and where you receive most of your mail. Think of it as the address you have on your driver’s license.
If you own multiple homes, you must designate one as your main home, even if you spend six months at one home and six at another.
Your primary residence is also where you potentially get a property tax deduction and income tax breaks, so choosing one as your primary residence works to your benefit.
But what happens if you keep your primary residence and buy another primary residence?
Keeping your Property
Life happens; sometimes, you need to move but don’t want to sell your existing property. To determine if you can get another primary residence mortgage, you must determine why you’re moving and your intentions for the existing property.
Next, you must prove these factors to your lender beyond a reasonable doubt for them to decide if you qualify for two primary residence loans.
Renting out your Existing Property
Most commonly, homeowners rent out their existing home and buy a new primary residence. In this case, your existing home is no longer a primary residence. Before renting it out, contact your current lender to ensure you aren’t violating any of your current mortgage’s terms. Since technically it’s now an investment property, you may have to refinance to rent it or risk violating your loan’s terms.
Using Two Properties at Once
If you don’t rent the existing home and plan to live in both homes, you might have two primary residence mortgages. But again, you must be honest with both lenders.
First, you must choose one home as your primary residence for the IRS and other official matters. Most of the time, this is the home you live in, and that will likely get the primary residence mortgage.
Some lenders may allow two primary residence mortgages if the other home meets the following guidelines.
- The homes are far enough apart to warrant having two homes if you can prove a reason you need to live in both.
- For example, your job requires you to spend considerable time in both places, and you’d prefer to have a house rather than rent a hotel.
- You want to buy a home for your dependent.
Conventional, FHA, VA, and USDA Rules about Primary Residence Loans
Each loan program has different requirements regarding holding more than one primary residence mortgage.
Conventional loans are for any type of home, including primary residences, investment homes, and second homes.
In rare instances, you can get approved to have two primary residence mortgages, but the requirements are quite specific:
- You’re buying a home for someone you care for, such as an adult child with special needs or an aging parent, and you own a home. Most lenders will give you a more competitive rate and not treat it as a second home.
- You co-signed for a family member, such as a child, and want to buy your own home. Your debt-to-income ratio must prove you can afford both loans, though, to get the lower mortgage rates.
FHA loans are only for primary residences, so most borrowers can have only one FHA loan at a time. Like most loan programs, though, there are exceptions, including:
- Your job relocated you more than 50 miles from your current residence, but you want to keep your original home.
- You are mid-divorce and want to buy a separate home.
- You helped a family member buy a home by co-signing a loan.
VA loans are also only for primary residences, but the VA has more flexible guidelines when helping veterans secure financing on an additional primary residence.
While a veteran may hold two VA loans simultaneously, they may need to make a down payment on the second home they purchase. It depends on how much of the VA entitlement you used on the first home. If you have entitlement left, you’ll likely need to put down 25% of the difference between the remaining entitlement and the purchase price.
The USDA doesn’t allow borrowers to have more than one USDA loan at a time. However, you can refinance your original home using a different loan program and then get a USDA loan for your new primary residence.
Can you have two primary residence mortgages at the same time? It’s rare, but there are exceptions.
What you’re really asking for is the most competitive terms on two mortgages, one on each property.
With extenuating circumstances, you might qualify for two mortgages with primary residence benefits, but remember, it’s always best, to be honest with your lender about what you’re doing with each property, so you don’t risk any type of mortgage fraud.
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