FHA Stricter When Buying Add’l Home

A new rule from the FHA (Federal Housing Administration) is aimed to stop people who currently own a home from buying a new, less expensive home and then walking away from the more expensive house. This tactic is known as “buy and bail”. In order to put a stop to this activity, FHA (which can only be used to purchase an owner occupied property) will no longer count rental income when determining if the borrower can qualify for the new house. This mean they must prove that they can qualify for both mortgages without using any of the rental income to help qualify. (This is waived if the owner has 25% equity or can prove they are relocating for their job and have a one year lease signed for the property.) ¬†As of September 2008