New FHA guideline

6 Replies

Hello all,

I have a question about a new FHA guideline that my loan officer just informed me off. He said that starting in Jan 1st, FHA does not allow you to count rental income from a property that you are departing unless you are moving 100 miles away or more.

If this is true that really messes with the property i have under contract. Me and my Fiancee currently own a four unit that we bought with conventional 20% down financing. Since it is owner occupied financing we have to live here for a year (till may 2016). My plan was to have my fiancee buy an FHA 2-4 unit and move into it and we would live separately till may when i would then move in with her (would satisfy OO provision i signed). However since her name in on our current unit as a cosigner, if they refuse to count the rental income from the other three units, her DTI will be insufficient. My LO stated that if not for the new rule regarding 100 miles we would have no issue (when we prequalified last year we were fine)

Now i have explored the legal side with multiple attorneys and loan officers and have been assured that as long as i live in the 4 unit that we currently own, there is no issue with her buying and living in the FHA building (both would still be Owner occupied). As long as we are okay living apart till may there is no issue (the other place is not too far away so no issues for us to maintain two separate addresses till we get married)

Does anybody have any insight into this new guideline and is there a Loan Officer that is able to make a loan like this work? Let me know

Thanks

@Nnabuenyi Anigbogu Have you read the actual guidelines, from FHA's site? I'm not familiar with it, but it doesn't make sense to me. Counting rental income from the property you're departing shouldn't have any distance factor. I only know of the minimum distance if you have an FHA at your present residence, but need to move for work, and are seeking a Second FHA loan, having two at the same time.

@Wayne Brooks I have read them and did not see anything related to what my loan officer was telling me which was why i wanted to pose the question here. According to him it was just implemented this month so it might not be documented publicly yet. Apparently he got it in the underwriting update his bank gets.

Im trying to substantiate what he is saying but havent been able to.

FHA handbook: http://portal.hud.gov/hudportal/documents/huddoc?i...

FHA letters: http://portal.hud.gov/hudportal/HUD?src=/program_o...

If it's not in there, it's not an FHA thing. It may be a lender-specific overlay that your specific bank made up. Or it may very well be a new FHA guideline that I'm unaware of, just as you are being told.

Guidelines are real. However another thing that is real is saying that a lender-specific overlay comes from FHA/Fannie/Freddie/whatever.

No one wants to say "Oh, it's OK per the guidelines. But my employer made up a stupid rule, and you placed your trust in me to know what my employer is up to, but I didn't, so now we can't do your loan at the last minute" or (if a mortgage broker and brokering) "Oh, it's OK per the guidelines. But I made the choice to pick a lender to broker your proposed loan to that will refuse to do it because they have an overlay that I forgot or didn't know about, and now at the 10 yard line realized that I screwed up and can't do your loan."

So enter, stage left, the "new guideline" that just came into effect 7 days ago, that no one can show you a copy of dated 7 days ago, and THAT'S the reason your loan is jammed up.