FHA financing has its stipulations, sometimes making it a less than perfect choice for certain types of situations. One situation where it can generally be used is when a tenant wants to purchase a home he has been renting from a landlord. There are no FHA regulations stopping this situation from occurring. There are certain rules that apply to it; however, as it is a different situation than purchasing a home from a complete stranger. The Identity of Interest Rule does play a part in this process, but just like everything else, there are exceptions to the rule.

2. FHA financing has its
stipulations, sometimes making it
a less than perfect choice for
certain types of situations. One
situation where it can generally
be used is when a tenant wants
to purchase a home he has been
renting from a landlord.

3. The first thing the lender will need to figure
out is what the relationship is between you
and the landlord.If your relationship with
the landlord does not meet one of the
following criteria, you could be required to
put down 15 percent of the sales price of
the home. The good news is that most of
these criteria are easy to meet, allowing
you to use the lower down payment option.
What is the
Relationship?

4. If you purchase the home from a family
member that is not on the loan
You are an employee of the builder of
the home
You are an employee of a company
that owns the home because of
another employee transfer
You have lived in the home and have
an enforceable lease for the last 6
months or longer
If you fit into one of these situations, you
could be eligible to put down just 3.5 percent.

5. The FHA requires these rules in order to protect
the borrowers and even the lender. The borrower
could be considered enticed to purchase the
property if there is an “arm’s length”
Why are there
Let’s take a look at a $200,000 purchase price for example:
Without an arm’s length relationship 3 percent
down payment: $7,000 down payment
With an arm’s length relationship 15 percent
down payment: $30,000 down payment
Rules?

6. It would be much harder to walk away from a
home that you purchased when you have
$30,000 of your own money invested in it than
it would be to walk away from a home that you
only have $7,000 invested.

7. TEXT
Not all lenders are willing to provide
FHA financing for a home that you
purchase from your landlord, so you
might have to talk with several lenders
until you find the right one.

8. Finding the
Best FHA Lender
BestFHALender is a one­stop shop
offering useful information about FHA
loans and enabling customers to shop
for multiple lenders.
CLICK HERE
TO LEARN MORE

9. Information Provided by
Justin Mchood
He is Americas Mortgage
Commentator and has been providing
Mortgage commentary for over 10 years.

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