Can You Legally Have Two Primary Residence Mortgages?

The concept of primary residence holds significant importance in the realm of mortgage lending and taxation. Typically, a primary residence refers to the property where an individual spends the majority of their time. However, certain circumstances may arise where an individual may question the possibility of having multiple primary residences. This article delves into the intricacies of primary residence designation, exploring the legal framework and exceptions that govern the financing of multiple properties as primary residences.

Defining Primary Residence

For mortgage lending and tax purposes, the Internal Revenue Service (IRS) establishes the criteria for determining a primary residence. According to the IRS, a primary residence is the address where:

• Most of your mail is received
• Your vehicles are registered
• Your driver’s license is listed
• Your income tax returns are filed
• You are registered to vote

Occupancy Requirements for Mortgage Lending

Mortgage lenders categorize properties into different types based on their intended use, with primary residences receiving the most favorable terms. This is because primary residences are deemed less risky for lenders, as homeowners are more likely to prioritize mortgage payments on their primary home over other properties. As a result, primary residence loans typically come with lower interest rates and more flexible qualification requirements.

Can You Have Two Primary Residence Mortgages?

In general, it is not possible to have two primary residence mortgages simultaneously. The IRS and mortgage lenders recognize only one property as a primary residence for an individual at any given time. However, there are certain exceptions to this rule, which we will explore in the following sections.

Exceptions to the One Primary Residence Rule

Conventional Loans:

• Caregiver Exception: If you own a home but wish to purchase a separate property for an adult child with a disability, Fannie Mae and Freddie Mac may treat the new property as a primary residence loan.
• Non-Occupant Co-Borrowers: You may co-borrow or co-sign a mortgage for a friend or family member while simultaneously purchasing your own primary residence, provided you have sufficient income to cover both monthly payments.
• Military Members on Duty: Active military members can maintain owner-occupied status on their primary residence while deployed or on active duty away from home.

FHA Loans:

• Job Relocation: If you are relocating for a job that is a significant distance from your current home, the FHA may approve a second primary residence loan.
• Outgrown Home: If you have outgrown your current home and have paid off at least 25% of its value, the FHA may allow you to purchase a new primary residence while retaining the first property.
• Divorce: In the event of a divorce, spouses who keep the house may be able to refinance their homes into their own names.
• Co-Signer: You may co-sign an FHA loan for someone else while also having your own FHA-financed primary residence.

VA Loans:

• Military Relocations: The VA understands that service members frequently relocate, and therefore does not require them to sell or refinance their VA-financed home when purchasing a new one.
• No Down Payment: Some veterans may qualify for two VA loans with no down payment, depending on their remaining VA loan entitlement. However, second VA loans typically require a higher upfront VA funding fee than first-time loans.

Qualifying for Two Primary Residence Mortgages

Even if you meet the criteria for an exception to the one primary residence rule, you must still qualify for two mortgage loans simultaneously. This involves meeting the lender’s credit score minimums, income requirements, and debt-to-income ratio guidelines. Additionally, you will need to have sufficient cash reserves to cover the down payment and closing costs for the new property.

While it is generally not possible to have two primary residence mortgages, there are certain exceptions that allow for this in specific circumstances. However, it is important to note that qualifying for two primary residence mortgages can be challenging, as you must meet the lender’s strict eligibility criteria. If you are considering purchasing a second property, it is advisable to consult with a mortgage professional to determine your eligibility and explore your financing options.