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Identity-of-Interest Transaction Down Payments

By T Chumba

Mortgage and Lending with Company 12345

May 14, 2009 02:24 AM

An Identity-of-Interest transaction is where a sales transaction is made between parties with family/business relationships.

To break it down very simply, and this is USUALLY always the case, when a family member sells to ANOTHER family member, FHA looks at that as an Identity-of-Interest Transaction.

I get at least 1-2 calls per month with this scenario, and want to post it on my mortgage blog to educate YOU, the consumer.

So even though FHA has a minimum down payment requirement of 3.5%, in THIS case, you would have to put down 15% percent.

Here is ONE of the exceptions to this rule:

1. The family member has rented the property for at least 6 months predating the contract, in which case a rental agreement will be needed.

If you are in this type of situation and do not have the 15% to put down, feel free to contact me for more info and some other tips that may help you out!

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T Chumba

Company - Arctic Bay, NU

Your dog

Chuck, identity of interest only applies to family members, so in your case, there should be no issues as long as your buyer qualifies.

Apr 26, 2011 02:47 AM

Jim, I just funded a loan the other week with this exact situation. If there is a relationship between buyer and seller (in my case, it was mother to son), max LTV is limited to 85% UNLESS you can document that the buyer has been a tenant and renting the property 6 months predating a sales contract.

In your case, if you're renting, have copies of rent checks (or bkstats) along with a lease or a written agreement outlining your occupancy status, you're good to go.

Oct 17, 2011 01:29 AM

Jason, relax buddy. Stay off the caffeine.

Jan 13, 2012 01:44 AM

Identity-of-Interest Transaction Down Payments

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T Chumba

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