The FHA 100-Mile Rule for Ohio Homeowners
Short answer: There is no single FHA 100-mile rule. There are two, and they answer different questions. One decides whether you may hold a second FHA-insured loan while keeping the first. The other decides whether the rent on the home you are leaving may count as income on your new file. Meeting one does not mean you have met the other.
Nearly every article you will find on this topic blends the two together, usually into one sentence about moving 100 miles away. That blend is where people get surprised at underwriting, because the two rules have different tests, different documents, and different consequences when you miss.
Our team walks Northeast Ohio homeowners through this often. A job moves someone from Canfield to Columbus, or from Salem out toward Pittsburgh, and the question is always the same. Can we keep the house, rent it out, and still buy where we are going. The honest answer depends on which of the two rules you are actually asking about.
Both rules live in HUD Handbook 4000.1, the FHA’s single-family policy handbook. We are quoting from the current edition, Update 18, issued August 12, 2026. Older copies of the handbook circulate widely online, so it is worth checking the revision date on whatever version you are reading.
The two rules, side by side
This is the table we wish existed everywhere. Read down both columns before you read anything else about the 100-mile rule.
| Rule one: a second FHA loan | Rule two: counting the departing rent | |
|---|---|---|
| Question it answers | May you have two FHA-insured mortgages at once | May the rent on the old house count toward qualifying |
| Handbook location | Section II.A.1.b.iii(A)(2)(c) | Section II.A.4.c.xii(I)(3) |
| Distance test | New principal residence more than 100 miles from the current one, for an employment-related relocation | Relocating to an area more than 100 miles from the current principal residence |
| Other qualifying paths | Increase in legal dependents with 75% LTV or less; vacating a jointly-owned property; non-occupying co-borrower | None. Distance is the gateway for a departing property |
| Documents | Evidence supporting the exception claimed, plus occupancy certification on the new home | Lease of at least one year past closing, plus evidence the security deposit or first month’s rent was paid |
| Equity test | Only on the family-size path, as a 75% LTV limit | With no rental history, an appraisal showing market rent and at least 25% equity |
Rule one: keeping an FHA loan and getting another
The handbook’s starting position is firm. FHA will not insure more than one property as a principal residence for any borrower, and it says outright that it will not insure a mortgage where the transaction was designed to use FHA insurance as a vehicle for obtaining investment properties. Section II.A.1.b.iii(A)(2)(c) then sets out what it calls the only circumstances in which a borrower with an existing FHA-insured mortgage may obtain another one.
There are four, and only one of them is about distance. A borrower may be eligible without selling the existing property if the borrower is relocating or has relocated for an employment-related reason and is establishing a new principal residence in an area more than 100 miles from the current one. Both halves have to be true. A move of 140 miles that has nothing to do with work does not satisfy this path.
The second path has nothing to do with mileage. A borrower who has had an increase in legal dependents, where the property now fails to meet family needs, may be eligible if the loan-to-value ratio on the current principal residence is at or below 75 percent, or is paid down to that level based on the outstanding balance and a current residential appraisal. The third covers a borrower vacating, with no intent to return, a principal residence that an existing co-borrower will continue to occupy. The fourth covers non-occupying co-borrowers in both directions.
One detail the handbook adds and most summaries drop: if you later move back to the original area, you are not required to move back into the original house, and you may obtain a new FHA-insured mortgage on a new principal residence, provided the relocation met the two requirements above. That matters in a region where people leave for a role and return a few years later.
The relocation has to be real. This page is about legitimately holding two FHA loans or legitimately counting departing rent. It is not a workaround. FHA occupancy is a certification you sign, and the handbook is explicit that a transaction structured to acquire investment property through FHA insurance is not insurable. If the move is not genuine, the answer is no, and that is the correct answer.
Rule two: counting the rent on the house you are leaving
This is a separate question with a separate answer, and it applies whether or not your next loan is FHA. Section II.A.4.c.xii(I)(3) covers rental income from other real estate holdings. Where that income comes from a property being vacated by the borrower, the handbook requires the borrower to be relocating to an area more than 100 miles from the current principal residence, and requires the lender to obtain a lease agreement of at least one year’s duration after the mortgage is closed together with evidence of the payment of the security deposit or first month’s rent.
If you do not yet have a rental history on that property since your last tax filing, there is an additional layer. The lender must obtain an appraisal evidencing market rent and evidencing that the borrower has at least 25 percent equity in the property. The handbook notes that this appraisal is not required to be completed by an FHA Roster Appraiser.
So the ordinary Northeast Ohio scenario, where somebody has lived in a house for six years and has never rented anything, lands squarely in that no-history category. Distance, a signed one-year lease that runs past your closing, proof the tenant actually paid, an appraisal with market rent, and 25 percent equity. Miss any one of them and the rent does not help the file, even though the tenant is real and the check clears every month. Guidelines vary by lender and individual overlays apply, so the file in front of your underwriter is what governs.
The 25 percent number, and why you keep reading 30
This is the single most repeated error on the subject. FHA’s departing-residence equity threshold is 25 percent. The 30 percent figure that shows up in article after article was never FHA’s. It came from Fannie Mae’s conventional guidelines, and Fannie removed it years ago.
Fannie’s current policy sits in the Selling Guide at B3-3.8-01, Rental Income, with the related debt treatment at B3-6-06, Qualifying Impact of Other Real Estate Owned. B3-3.8-01 contains no equity threshold at all. What it requires is the lease supported by Form 1007 or Form 1025, or evidence the lease terms have gone into effect, meaning at minimum two months of consecutive bank statements or electronic transfers of rental payments on an existing lease, or copies of the security deposit and first full month’s rent check with proof of deposit on a newly executed one. The rent itself is counted by multiplying gross monthly rent by 75 percent, with the other 25 percent treated as absorbed by vacancy and ongoing maintenance.
One more citation note, because it trips up even careful readers. Fannie’s rental income topic used to be numbered B3-3.1-08. It was renumbered to B3-3.8-01. If a page is still citing the old number, it has not been reviewed in a while, and that is a reasonable signal about the rest of what is on it.
| Departing rent, by program | FHA (4000.1) | Fannie Mae (B3-3.8-01) |
|---|---|---|
| 100-mile relocation | Required for a vacated property | Not stated in the topic |
| Equity threshold | 25% with no rental history | None in the topic |
| Lease | At least one year past closing | Lease supported by Form 1007 or 1025, or evidence terms are in effect |
| Proof of payment | Security deposit or first month’s rent | Two months of statements, or deposit and first full month’s check with proof of deposit |
| Share of rent counted | Calculated per handbook method | 75% of gross monthly rent |
What this looks like from the Valley
Distance is worth measuring rather than assuming. From Youngstown, Pittsburgh and Cleveland are both comfortably inside 100 miles, and Columbus is not. From Salem or Lisbon the picture shifts again. If your relocation is the reason you are asking, get the actual mileage between the two principal residences before you build a plan around it, because a move that feels major can still fall short of the threshold, and a move that feels modest can clear it.
The 25 percent equity piece is often the real constraint locally rather than the mileage. In a market where entry-level values are modest, a homeowner five or six years into a loan may or may not be there yet, and a current appraisal is what settles it. Our guides to FHA loan requirements and benefits in Youngstown and FHA loans in Canfield cover the underlying program if you are newer to it, and if you are staying put and simply improving the loan you already have, an FHA streamline refinance in Alliance is a different path entirely.
Two related topics we cover separately, because they are frequently confused with this one: turning your Ohio home into a rental, which brings its own property tax consequences on top of the financing question, and house hacking a duplex in Youngstown, where you occupy one unit and rent the other. If your current loan is a USDA loan rather than FHA, keeping your USDA home as a rental follows an entirely different set of rules, and none of what is on this page applies to it.
Where DSCR fits, and where it does not
Once the departing house is a rental and you are looking at the next one as an investment rather than a home, a DSCR loan becomes part of the conversation. A DSCR loan qualifies on the property’s own income against its debt service rather than on your personal income documents.
Two boundaries matter here. A DSCR loan is for non-owner-occupied property only, so it can never finance the home you are moving into. And it is business-purpose lending, which is a statement about how the loan is classified and documented, not a claim that the standards are lighter. The 100-mile rule is an FHA occupancy and income-documentation rule. It has no bearing on a DSCR file, because a DSCR file is not an occupancy file.
If you are working out which of these two rules your situation actually turns on, our team is glad to look at it with you before you sign a lease or make an offer. You can start a pre-approval when you are ready. Every figure is subject to a full loan estimate and subject to credit approval.
Frequently asked questions
Is the FHA 100-mile rule one rule or two?
Two. Handbook 4000.1 section II.A.1.b.iii(A)(2)(c) governs whether you may hold a second FHA-insured mortgage, and section II.A.4.c.xii(I)(3) governs whether rent from the property you are vacating may count as income. They share the 100-mile figure and nothing else.
Do I need 25 percent or 30 percent equity in my departing home?
For FHA, the handbook states at least 25 percent equity, and only where there is no rental history on the property since the previous tax filing. The 30 percent figure circulating online is not an FHA number. It came from Fannie Mae’s conventional guidelines and is no longer in the current Selling Guide, which contains no equity threshold in B3-3.8-01.
Can I get a second FHA loan without moving 100 miles?
Possibly, through one of the other listed exceptions. The handbook also allows an increase in legal dependents where the property no longer meets family needs and the loan-to-value ratio on the current residence is at or below 75 percent, vacating a jointly-owned property that a co-borrower will keep occupying, and certain non-occupying co-borrower situations. Eligibility depends on documentation and on lender overlays, which vary.
Does the 100-mile rule apply if my new loan is conventional?
The FHA rules apply to FHA-insured financing. If your next loan is conventional, Fannie Mae’s B3-3.8-01 governs the rental income and B3-6-06 governs how the departing property’s obligations are treated. Those sections require the lease and payment evidence and count rent at 75 percent of gross, without an equity threshold.
How long does the lease on my departing home need to run?
Under FHA guidance, at least one year’s duration after the new mortgage closes, along with evidence that the security deposit or first month’s rent was actually paid. A lease that expires two months after your closing does not satisfy it, so line the dates up before you sign anything with a tenant.
Is this a way to build a rental portfolio with FHA financing?
No, and the handbook addresses that directly. FHA states it will not insure a mortgage where the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties. These exceptions exist for people whose lives genuinely moved. Investment property financing is a separate category with its own products.
Which version of Handbook 4000.1 should I be reading?
The current one. As of this writing that is Update 18, issued August 12, 2026, published on hud.gov. Several older editions remain widely linked from other sites, so check the revision date printed in the footer of whatever copy you open before relying on it.
Talk it through with our team before you commit to a move.
Call (330) 337-3260, email TeamDawes@FairwayMC.com, or get pre-approved online.
This article summarizes published FHA and Fannie Mae guidance and is general information, not an eligibility determination for any specific borrower or property. Program requirements change, individual lender overlays vary, and the underwriter reviewing your file makes the decision. Questions about the tax treatment of converting a residence to a rental belong with your CPA, and lease questions belong with your attorney. William Dawes, NMLS #259692. Fairway Independent Mortgage Corporation, NMLS #2289. All loan programs are subject to credit approval and subject to a full loan estimate. This is not a commitment to lend.