from my fha guidelines
1.26.1 Identity-Of-Interest Transactions
· Identity-Of-Interest Transactions:
o A sales transaction between parties with family relationships or business relationships
Restricted to a maximum LTV of 85% on principal residences. However, maximum financing
above 85% LTV is permissible under the following circumstances:
· A family member purchases another family member’s home as a principal residence. If a
property is sold from one family member to another and is the seller’s investment property,
the maximum mortgage is the lesser of either: a) 85% of the appraised value, or b) the
appropriate LTV ratio percentage applied to the sales price, plus or minus required
adjustments. The 85% limit may be waived if the family member has been a tenant in the
property for at least six months immediately predating the sales contract. Must provide
documentation for verification.
· An employee of a builder purchases one of the builder’s new homes or models as a
principal residence.
· A current tenant purchases the property that he or she has rented for at least six months
immediately predating the sales contract, (a lease or other written evidence must be
submitted to verify occupancy).
· A corporation transfers an employee to another location, purchases that employee’s
home, and then sells the home to another employee.
Retired Lender