HUD HOC Reference Guide

If the number of legal dependents increases and the house no longer meets the family?s needs, a second dwelling may be financed with an FHA-insured mortgage.

When such an increase in the number of dependents justifies the need for the purchase of an additional home, using an FHA-insured mortgage, and the prior residence is to be rented, a minimum vacancy and maintenance factor for the market area shall be used when calculating the income from the rented dwelling. Use the lesser of the rent on the lease or the appraiser?s estimate of fair market rent. Also, the first FHA-insured loan must have a loan-to-value of 75% (or less), predicated upon a current real estate appraisal. Please see: Vacancy, Collection and Maintenance Cost Factors, page 2-21 in this guide for additional or specific information.

Also see: HUD Handbook 4155.1, Section 4.B, paragraph 1-2b.