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FHA Loans: The 100 Mile Rule


The Spire

FHA loans are great for those with a lower down payment, less than perfect credit, a bankruptcy in the last 7 years, modest income, buying a 2–4-unit home, etc. However, an FHA loan may not be an option for many looking to add to their real estate portfolios, especially those looking to utilize the popular BRRRR method (Buy, Rehab, Rent, Refinance, Repeat).

The FHA’s 100 Mile Rule can make it impossible to obtain a new home with an FHA loan while converting your current residence into an investment property. The requirement states that a new primary residence must be 100 miles away from the old departure residence. So, if you plan to purchase a new home in your neighborhood or a nearby community, you will not qualify for an FHA loan. But, if you are moving more than 100 miles away to a new town or state for a job transfer or other reasons, FHA can still be a great option and allow you to keep and rent your current home.

If you are planning on staying local, you’ll likely want to look at other options, like a conventional loan. Be sure to work with a knowledgeable and professional lender so they can pre-approve you correctly. If you don’t, you may be under contract with thousands of dollars of earnest money at risk.

A Lending Hand for Financing Home Mortgages

Spire Financial (A Division of V.I.P. Mortgage, Inc.) brings lending expertise to you. All of our loan officers offer personalized communication for every client, guiding them through the process. We can show you ways to maximize your finances and unlock future opportunities. Spire Financial keeps you in control of refinancing, debt consolidation, and home equity. Together, we can achieve your financial goals.