FHA OO mortgage - appraisal timing

3 Replies

Hi all, I am working to purchase a property and found that an OO FHA mortgage best suits my needs.

I have an accepted offer on a multi but have run into a snag … one of the tenants is delayed in moving out of the unit I’ll occupy. They’re very cooperative and working to secure a new place, but it could be another month.

In the meantime, everyone is getting restless as we’ve delayed the financing until a unit is vacant. It is a real pain (plus rates have shot up … oh well, my bad luck).

Anyway, my question is this: will OO financing be approved even if the units are occupied at the time of appraisal?

My lender suggested I simply have the tenants sign a letter stating they’re moving out by a particular date; others warned me that a fully occupied property will be rejected by the appraiser.

It would be so much easier if we could just move forward with financing in the meantime – appreciate any thoughts or feedback from firsthand experience.

PS – property is in Connecticut.

Originally posted by @Jason A. :

Hi all, I am working to purchase a property and found that an OO FHA mortgage best suits my needs.

I have an accepted offer on a multi but have run into a snag … one of the tenants is delayed in moving out of the unit I’ll occupy. They’re very cooperative and working to secure a new place, but it could be another month.

In the meantime, everyone is getting restless as we’ve delayed the financing until a unit is vacant. It is a real pain (plus rates have shot up … oh well, my bad luck).

Anyway, my question is this: will OO financing be approved even if the units are occupied at the time of appraisal?

My lender suggested I simply have the tenants sign a letter stating they’re moving out by a particular date; others warned me that a fully occupied property will be rejected by the appraiser.

It would be so much easier if we could just move forward with financing in the meantime – appreciate any thoughts or feedback from firsthand experience.

PS – property is in Connecticut.

With FHA you have 60 days to occupy the property.

You can buy it occupied as long as one leases is MTM

@Jason A. absolutely follow what your lender is stating. It's not up to the appraiser to reject or approve the appraisal. He/She just does the report and gives it to the lender for approval. The lender is the one that makes the call. As suggested above, an FHA loan requires that you move in within 60 days. In theory, if you show the current lease showing that the lease will expire/renew on X date, and then a letter from the renter stating their intentions, this should be ok to have underwriting approval. However, this will be up to the underwriter. So your loan officer should ask the underwriter this scenario to see if they would be willing to sign off on the transaction. Hope this helps!

Originally posted by @Jason A. :

Hi all, I am working to purchase a property and found that an OO FHA mortgage best suits my needs.

I have an accepted offer on a multi but have run into a snag … one of the tenants is delayed in moving out of the unit I’ll occupy. They’re very cooperative and working to secure a new place, but it could be another month.

In the meantime, everyone is getting restless as we’ve delayed the financing until a unit is vacant. It is a real pain (plus rates have shot up … oh well, my bad luck).

Anyway, my question is this: will OO financing be approved even if the units are occupied at the time of appraisal?

My lender suggested I simply have the tenants sign a letter stating they’re moving out by a particular date; others warned me that a fully occupied property will be rejected by the appraiser.

It would be so much easier if we could just move forward with financing in the meantime – appreciate any thoughts or feedback from firsthand experience.

PS – property is in Connecticut.

 Your lender is correct. A credible plan needs to be in place for you to owner occupy within 60 days. Having that tenant signing something to that effect should do the trick.

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