Profile picture for user94387736

Buying from a landlord/FHA guidelines question...

Ok. So, my story is a little complicated but I'll try to make it as short as possible. I previously owned a condo in a three unit townhome in the state of Massachusetts. Anyhow, the owner of the other two units had approached me to see if I was interested in owning the entire house which I thought was a great idea. However, if I wanted to buy the other two units it would be tough because I would have to put 25% down for each one so we needed to go around this but how? Well, at the end the only way was for me to sell my unit to him (which I did) and he in turn would dissolve the association (which he did) and turn it into a three family home (which he also did). Now, I'm nervous because I'm thinking FHA might ask for me to show that I have paid rent to him for at least 6 months. Is this the case? My loan officer who has sent my paperwork to underwriting thinks there won't be a problem but I hear from others that it might be. I am wondering if this is going to delay things for five more months since I sold the unit about a month and a half ago. Any insight would be helpful. I am not related to him and we were not business partners or anything like that. Hell, there was not even a real condo association which collected a fee or anything. But now I'm nervous that underwriting will see this and not like it.
Oh, and I did discuss this with the loan officer before I even sold my unit to make sure it wouldn't be a problem and he told me it would not be. Please feel free and help out if anyone out there has any experience with this kind of thing. Thanks in advance.
  • August 31 2013 - Lawrence
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Answers (4)

Profile picture for user94387736
I am told that 3 Multi Family homes required 3 months in reserve and not 6 months.  I have been told this by 3 different loan officers.  If it's Mass Housing then it would be 6 months in reserve.  Please correct me if I'm wrong.
  • September 02 2013
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Should not be an issue, I sell a lot of Multis and FHA will just comp the rest in the are? You will need 6 months in reserve though.
  • August 31 2013
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You are right it is a bit complicated, but if I were you I would rely on the advise given by your lender.
  • August 31 2013
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Profile picture for shapiroamg
That is complicated. FHA does not require rent payments to be made. I would wait and see if the question is asked by the underwriter. The period of time that you went from an owner of the unit to closing the multi family isn't too long so I think you will be ok.
  • August 31 2013
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