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Steven Ceceri

FHA Rent-to-Own Underwriting Rules

Sunday, February 10, 2013 - Article by: Steven Ceceri - Creative Financing Options Group - Message

There are very specific guidelines regarding these types of transactions that a buyer and seller must follow in order for FHA financing to be an option. You can be a deal-saver by guiding clients with the right information!

Rent-to-Own Agreements and Rent Credit

Rent credit for down payment granted by a landlord to tenant facts:

  • Cannot exceed the difference between monthly rent and market rent.

(Ex: Landlord collects $1,000 per month and market rent is $800. Only $200 can be applied toward down payment for future purchase.)

  • Market rent is determined by appraiser.
  • Rent-to-own agreement must be provided to lender.

Landlord/Tenant Sales Transactions

  • Loan amount will be limited to 85% LTV if there is a family or business relationship between the parties UNLESS:
  1. Tenant has rented for at least six months (lease or other occupancy verification is required)
  2. Sales contract is not dated prior to completion of 6-month rental period
  • Maximum financing (96.5%) is available for landlord/tenant transactions with no family or business relationships with no restrictions on previous rental period.

Questions? Call me! I'd love to be of service!

Your Trusted Mortgage Professional,


Steven V. Ceceri
Senior Loan Officer
First National Bank of Layton

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