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buying a house from my parents

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Anonymous
Not applicable

buying a house from my parents

I plan on buying a house from my parents.  I just started looking at 30yr fixed FHA rates, since I dont have a lot of money for a down payment, and credit card debt.  Is ther another kind of loan to look for that will save me and my parents money in the long run?  I'm just finding out my options at this point. Any information will be greatly appreciated.

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Anonymous
Not applicable

Re: buying a house from my parents

For FHA you will still need the 3.5% downpayment, you can't get that from your parents - tho they can increase the price of the house to cover the closing costs (as long as it appraises for the increased price)  Also remember that you don't qualify for the first time homebuyer credit when you buy from parents.

 

Do you and the house qualify for the USDA mortgage? Are you in the services at all?

 

Check your DTI for any kind of mortgage if you have credit card debt.

Message 2 of 4
SonorityGenius
Established Contributor

Re: buying a house from my parents

Look into Gift of Equity for these types of transactions where you dont have DP and buying from family, in the long run (sans tax) it saves money and is pretty efficient..

 

(google it for tons of info on it, and tips) 

Message 3 of 4
ShanetheMortgageMan
Super Contributor

Re: buying a house from my parents

Keep in mind that with FHA, if you are buying the home from your parents, or any other party you have a family or business relationship with, the maximum loan-to-value could be limited.  Below are the details.

 

TRANSACTIONS THAT AFFECT MAXIMUM MORTGAGE CALCULATIONS. Certain types of loan transactions affect the amount of financing available and the calculation of the maximum mortgage. These transactions include identity-of-interest, properties with non-occupying co-borrowers, three- and four-unit properties, properties for which a house will be constructed by the borrower on his or her own land or as a general contractor, payoffs of land contracts, and transactions involving properties under construction or less than a year old. 

 

A. Identity-of-Interest Transactions. Identity-of-interest transactions on principal residences are restricted to a maximum LTV ratio of 85 percent. Identity-of-interest is defined as a sales transaction between parties with family relationships or business relationships. However, maximum financing above 85 percent LTV is permissible under the following circumstances:

1. 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 percent of the appraised value, or
b. The appropriate LTV ratio percentage applied to the sales price, plus or minus required adjustments. The 85 percent 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. A lease or other written evidence must be submitted to verify occupancy.
2. An employee of a builder purchases one of the builder's new homes or models as a principal residence.
3. 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.)
4. A corporation transfers an employee to another location, purchases that employee’s home, and then sells the home to another employee. 
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