As more and more consumers are turning toward FHA loans, a lot of people in the industry are finding out that there are guidelines that are not exactly intuitive.
One of the rules that many Realtors and Loan Officers are not aware of is associated with non-arms length transactions between Buyers and Sellers. For "Identity of Interest" transactions (this is what FHA calls non-arms length transactions) the loan amount is limited to 85% of the lesser of the purchase price or sales price.
When a Buyer is given early occupancy on a purchase, they are effectively a "renter" of the property and the "Identity of Interest" rules may apply. Not all lenders will interpret this event the same but I have heard from Realtors that have had transactions fall apart because of this issue.
In any event, I'd advise against giving early occupancy on FHA transactions. It represents a greater risk to the lender and of course to the Seller as well.
Good luck with your listings and sales and thanks for visiting!
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