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FHA Loan - Not able to show cancelled checks or bank statements

My husband and I recently applied for a FHA loan. We are worried that we can't show that we have paid rent for the last 12 months. The condo is owned by my mother and we have lived there for 10 years, my parents pays the rent and HOA, we pay the quarterly HOA, now that my parents are selling the condo to us we cannot show 12 months of cancelled checks or bank statements. Is there a work-around for this issue? Can my mother provide a notarized verification of rent letter and her bank statements or copies of cancelled checks? Thank you for advise! by Redd3322955 from New Haven, New York. Mar 12th 2018 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,369 contributions

More info needed.. First, you should be having this conversation with your loan officer.. he/she has all the info right there to advise you.. But in general.. The guideline exists to prevent loan fraud.. When renting from a relative or friend.. they will say or do anything to help you get financing, so getting a notarized statement is not acceptable. The lender must verify that the payments were made to them on time by you!! so, if you provide canceled checks, then that's proof YOU made the payments.. If you paid a property management company, they can show a payment history.. and that would be sufficient, but that's not your scenario.. You could provide 12 months of YOUR bank statements showing you consistently withdrew the rent each month around the same time... this is not always acceptable, but some lenders will... getting copies of your parents bank statements showing a consistent depots each month will not be acceptable, because there's no way to prove where those funds came from if it's cash.. and proving your parents made their mortgage payment on time isn't acceptable proof you will make your payment on time. Not every FHA loan requires proof of rent for the past 12 months.. only low credit score, manual underwritten loans require them.. if you have high scores and a good credit history, then this can be waived.. but if you have low scores and your file is being underwritten manually, then it could be a deal breaker.. if that's the case, then my advice to you would be to start paying your parents by Check or by ETF out of an account with your name on it.. after 12 months, you will have sufficient proof on time rent payments.. Understand that the underwriter does not care if you were a week late here or there.. They need to know that you are not 30 days or more late.. Call your loan officer and have this conversation with them.. they should be able to advise you .. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Mar 13th 2018
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,369 contributions

BTW.. I wanted to add one thing.. Per FHA guidelines, proof of rent is not the only allowable alternative credit reference. FHA allows for other "Household" expense to be considered.. Gas, Electric, Water, Utilities, etc can also be used as a credit reference.. Although, rent is the big one and most lenders have overlays' requiring rent to be one of them, not every lender is stuck on rent only.. Click this link.. https://www.hud.gov/sites/documents/4155-1_1_SECC.PDF Go to pages 1-C-12 & 1-C-13 to see what's exceptable.. you are required to have at least 1 item from Group 1 and 2 or more items from group 2.. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893

Mar 14th 2018
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