Seller Carry Back with FHA Loan

lbnc
Contributions:6

We are coming up on our 3 year anniversary of our foreclosure and would like to purhase. We make about $150K per year and have very little debt and have rebuilt our credit to about 650 scores. We would like to purchase something in the neighborhood where we rent but these homes are in the $350-375K range so to get the mortgage down to the FHA limits ($295K in our county) we would need around $80K down. Will the FHA allow the seller to carry back say $20-30K in a case like this. Thanks

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February 11 - US

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Answers (9)

Norm D Plume, "America Needs Nixon!"
Contributions:1670

Norm, are you saying if we purchase a home with a sell prices of $350K and we put 3.5% down (12,500) the sellers could carry the rest (47,250) to bring the FHA mortgage down to $295K
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correct.

My post was a cut & paste directly from the FHA web site.

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February 12

wayne lancaster, "funds2"
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Norm,
Not really...... if $295K as poster mentioned is FHA loan limit in his county then that is the max. loan available -LTV/CLTV as your your initial FHA guideline post states. $12.25K would be down payment on $350K sales price if FHA loan limit was $350K or more.

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February 12

lbnc
Contributions:6

Thank you for your replies.

Norm, are you saying if we purchase a home with a sell prices of $350K and we put 3.5% down (12,500) the sellers could carry the rest (47,250) to bring the FHA mortgage down to $295K. I am not being naive in thinking that any seller would actually do this, but just wondering if I understood what you said. I also understand that we would need the ratios to cover both loans. Thanks again!

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February 12

Norm D Plume, "America Needs Nixon!"
Contributions:1670

At $350K sales price you would need $55K down payment.
======================
350,000 times 3.5% = $12,250.

Bad calculater day, Wayne?

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February 12

wayne lancaster, "funds2"
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If the max. loan limit in your county is $295K then that is the max. first and seller held second liens. At $350K sales price you would need $55K down payment. Normally this is where any loan officer would think about a conventional loan with 5-10% down but with a foreclosure in last 3 yrs that as you are likely aware is not possible. I am assuming you have $50K or so to put down based on your post, so you should be able to get in or close to your neighborhood.

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February 11

Kelly Erickson, "Kelly M. Erickson"
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Mr. Norm Plume,

The "thumbs up" does not work but you get it! I'm filing this away in my creative financing information.

Thank you,

Kelly

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February 11

Norm D Plume, "America Needs Nixon!"
Contributions:1670

One of the crosses we bear on this site is sign pounders like Pat who are neither qualified nor licensed to provide mortgage advice post with comments that aren't even germane to the question.

yes, the seller can carry a 2nd mortgage. A simple review of FHA guideline 4155.1 5.C.4.a spells out the method and requirements for doing so.

to wit:

 the secondary financing is disclosed at the time of application

 the required minimum cash investment is not financed

 the insured first mortgage does not exceed FHA mortgage limits

 the combined loan-to-value (CLTV) ratio of the first and subordinate liens

does not exceed the applicable FHA loan-to-value (LTV) limit

 the borrower can afford the total amount of the payments

 any periodic payments are level and monthly

 there is no balloon payment during the first ten years, and

 there is no prepayment penalty

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February 11

Pat Pribisko, "Pat Pribisko"
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I suggest that you look for a home and mortgage that is with in your current means. Find a home where you can afford to meet the FHA lending guidelines.