• I am hung up over this and cannot move forward until I address the down payment/ option deposit issue.
• No one seems to have a bullet proof way for the buyer to use his or her option deposit towards the purchase price.

FHA GUIDLINE=To be eligible for a mortgage insured by FHA, the property must be purchased from the owner of record and transaction may not involve any sale or assignment of the sales contract.


I do FHA loans everyday and I have spoken to lenders about this and I know for a fact that with FHA they will not allow any assignment money/ option deposit money collected by a 3rd party for the down payment.

Some say their are lenders out there WHERE?? And will they be there when the buyer is ready to purchase? WHo KNOWS???

So I have come up with the only way I can figure to make it work.


1. Buyer signs lease
2. Buyer signs option to purchase in 12 months
3. Buyer signs contract for 100,000 - $3500 balance owed on contact 96,500 to close in 12 months
4. Seller signs CA assigning $3500 for real of option to TB. ((CHECK MADE OUT TO THE TITLE COMPANY))

Title cuts you a check for the CA.

This way the bank has a check showing the money made out to title for the purchase.


Any Comments are appreciated.

Thomas Martin
http://www.fhamortgageprograms.com/

Thomas there are 10 ways to skin a cat. Your reading to much into it. The option consideration goes towards the purchase price. It may or may not be part of a down payment?

Hi Steve,

I have the same concern. I mean if you are selling this to the t/b and they have to come up with one large chunk of money when they sign the option agreement and then they have to come up with the entire downpayment when they exercise the option? How is that realistically going to work for the average person? How do any of these people end up buying the house? How is the whole lease option strategy really that much of an advantage over just renting a reasonable apartment and saving your money and then buying when you are really ready? How has this worked for you in the past Steve? Has the t/b then come up with the entire downpayment when they were ready to purchase? Sorry for all the questions.

Thanks,
Rosanna

The advantages to the tenant buyer:

1) Low payment to get in the property and have an option to buy (option consideration)
2) Rent money is working for them, (rent credits)
3) Price is locked in, and any appreciation is the t/b's
4) Control of property
5) Time to obtain best possible financing

I offer a nice house in a good area and a great deal. The tenant/buyer has the option to buy or not. The tenant/buyer has told me they want to buy and they have the potential to buy in the near future. I have done my screenig to confirm their potential to buy and they will be good tenants. If they don't like the deal, that's fine, they can stay in their apartment. Their financing is not part of my deal. That is the tenant/buyer's responsibility.

In the past I have had tenant/buyers purchase usnig a refinance, using a first time home buyer's program, and using conventional or FHA financing. The last 3 tenant/buyers that I have had purchase, got their ducks in a row and bought another house and didn't buy mine.

Sheeesh

Thomas, if you mean there is no guarantee that option money can be guaranteed to be part of a buyer's down payment, then you are right. That money is guaranteed, though, to be a credit towards the purchase price. The form it takes, as has been discussed here numerous times, depends upon the borrower and their lender.

NOTE TO SELF
OK thats right so we credit it towards the downpayment OR
Subtract it from the purchase price.

THanks Mike

You're welcome, Thomas. Just to repeat: the option money will be used in one of two ways: either as part of the down payment or, more likely, a credit towards the purchase price.