Does owner finance affect conventional lending options?

Question

Say I I owner finance a property, would I still be able to use my VA Loan or FHA loan for another property? or will lenders consider it debt?  Will they say I am not a first time home buyer?

Jay Hurst · Answer

You do not have to be a first time home buyer for either FHA or VA. So, if you current home that you owner finance still has VA financing on it, then you could potentially do a FHA loan but not a VA. And vice versa.  But, if you still have financing the existing loan would be considered debt.

Trevor Alexander · Answer

Hi Alex - yes, you can still qualify for a VA loan of FHA if you plan to occupy the property. You don't have to be a FTHB to use those loans. You would need to convert your existing owner-occupied property to a rental in order to use a VA or FHA loan. You would however, need to be able to qualify for both mortgage payments unless you get a lease agreement for the departing residence; you could use 75% of rents to offset the mortgage. Property would need to be 100 miles away in order to do this for an FHA loan, FYI.

Erik Browning · Answer

@Alex Pino Accurate, once your name is recorded on a property a lender will do a title search and confirm your properties owned. If it's not listed in your loan app, it will be added during underwriting.

Andrew Postell · Answer

@Alex Pino Oooo!  Love all the Texas love here.  But as mentioned above you can own dozens of properties and still get a VA loan.  You can even have multiple VA loans.  Of course you still have to qualify for it but the properties themselves one disqualify you.  Hope all of that makes sense.

Zach Wain · Answer

@Alex Pino - will lenders consider owner financing a debt?  Yes, they should.  If the Owner recorded a deed of trust the lender should be able to see there is a lien on the property.  Will it show on your credit report - No?  Could an underwriter/lender overlook it by mistake - sure.  But for the most part, plan on having that debt count against you.

Jonathan R McLaughlin · Answer

Banks etc. might be more cooperative if the owner of the note is willing to subordinate to new financing.

Melvin List · Answer

Yes the lender will pull an name and deed search and they will find your Owner Financed Property.

Does owner finance affect conventional lending options?

Most Popular Reply