HUD Expands Identity of Interest Definition for FHA Mortgages

Mortgage and Lending with Prospect Mortgage NMLS #151088

For all FHA mortgages, HUD recently revised its Family Member definition for Identity of Interest.   The definition of a family member, for purposes of Identity of Interest transactions has been expanded to include:  

·     Brother, stepbrother

·     Sister, stepsister

·     Uncle

·     Aunt


These changes are in addition to the previous definitions including:


·     Child, parent or grandparent 

·     Spouse

·     Legally adopted son or daughter, including a child who is placed with the borrower by an authorized agency for legal adoption

·     Foster child


An identity of interest transaction is a sale between parties with family or business relationships.  Financing above the 85% maximum LTV for identity-of-interest transactions is permitted under certain circumstances.


Family Member Purchase

The 85% LTV limit may be waived if the family member has been a tenant in the property for at least six months immediately predating the sales contract. A lease or other written evidence must be submitted to verify occupancy.


Tenant Purchase

A current tenant, including a family member tenant, purchases the property where he/she has rented for at least six months immediately predating the sales contract.  A lease or other written evidence to verify occupancy is required.  The maximum financing calculation is not impacted in a sales transaction between a tenant and seller with no identity of interest.




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It is always advisable to consult with a knowledgeable lending professional when navigating today's turbulent mortgage and real estate marketplace.  I am committed, qualified and equipped to help you evaluate your options!




Also check out:


Conventional Financing Mortgage Program Overview/Updates


FHA Financing Mortgage Program Overview/Updates


Georgia Dream Down Payment Assistance Program Overview/Updates


USDA Financing Mortgage Program Updates  


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Thom Abbott |770.713.1505 | Intown Atlanta GA Condo Living - Atlanta, GA
Midtown Atlanta GA Condos For Sale

Rodney...always good to have good information! Thanks for sharing this!


Mar 06, 2012 08:59 AM #1
Eleanor Thorne
Equity Resources - Cary, NC
Equity Resources 919-649-5058

This is an important FHA Guideline change - great update!

Jun 06, 2012 02:16 PM #2
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FHA 203K & HomeStyle Renovation-AL,GA,TN
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