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Rent To Own Rules

Conventional & VA Rent To Own Rules

September 1, 2010 by · Leave a Comment 

With VA, there is no rule or guidance!!  So, that means it is up to the lender and underwriter to figure it out.  That means a lot of variance.  My GUESS is that they would probably follow FHA more so than conventional protocol.  Fannie and Freddie loan requirements are slightly different.  Fannie limits the rent credit for the past twelve months of the lease.  The appraiser will once again determine what is fair rent, then let any overage apply to the downpayment.  The lease must have been in place for 12 months as well as have a verified 12 month payment history-with check or money or receipts.  Freddie is slightly different.  For example, Freddie has no minimum rental period.  Same thing with the appraiser and rent determination for the credit.  I believe the credit for down payment vs rent paid can go beyond 12 months.  So, if I’m correct, you could have a larger amount credited back for past payments.  Rules and underwriting are OF COURSE always subject to change at any time and any additional lender overlay.  Always check with your favorite lender FIRST before you enter into any arrangement.

 



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Rent To Own Rules

FHA Has Special Rent To Own Rules

September 1, 2010 by · Leave a Comment 

If you plan on buying a home under a rent to own scenario, there are different rules for different types of loans.  FHA is currently very popular.  The appraiser will determine the fair market rent with the balance above fair market rent allowable as a credit towards a future downpayment.  The rent to own agreement must also be approved by the lender. There also is a loan to value restriction (85% LTV) if the parties are related and they haven’t rented for a long enough period of time-usually at least 6 months. For NON related sales agreements, you can currently go up to 96.5% and not have to have a minimum rental period. Rules and underwriting are OF COURSE always subject to change at any time and any additional lender overlay. Always check with your favorite lender FIRST before you enter into any arrangement.

 



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