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Don47

FHA Guidelines Concerning Option Money and rent credits

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Please comment on how the option money and rent credits should be applied when working the T/B toward qualifing using FHA financing? It has been my practice to apply the option money toward the down payment (the 3.5% that FHA requires). I usually apply the rent credits toward the purchase price. The property is offered somewhat higher in price than the seller will end up with to cover the rent credit and option money, however.

 

I realize the lender will dictate this, but I need to have guidelines up front when I discuss this subject with the seller and T/B. I want the T/B to understand how the process works so he can keep good records and be better prepared when his credit repair is completed and he applies for his loan. Thanks.

 

Don

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We use the assignment fee to apply towards the 3.5% and the rent credit is applied towards the closing costs, but my docs don't state a rent credit, simply a seller concession.

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