FHA and buying out rent to own/land contract?

Anonymous — Sun, 06 Sep 2020 18:56:48 GMT

We're currently rebuilding after a BK7 discharge 9/2019. We've made massive leaps and done great on the rebuild.

We have 1 more year before FHA will qualify us.

Right now our CU has us with a mid score of 660. I was pretty shocked at that tbh. They have been a huge help, and she kinda dug a little when they did our car loan in June, so we knew if we had to work on anything before the 2 year mark.

All seems to be well there.

We are currently at the house we want to buy. A friend owns it, and we're on a rent to own/land contract with him. Hes crediting us part of the payment each month towards the house. If it helps, estimated payment will be about the same as what we pay now, so the fear of sticker shock is avoided, which I've heard can scare away some lenders.

Wife and I are 6 figure earners now, and live rural. House is $160k.

My big concern is, how will FHA look at the money we paid being credited? Will they treat it as a down payment? If so, we will have an approximate $15k DP when we clear.

Current front end DTI is about 19%. With mortgage CU said it would appear to FHA as around 30%? I'm guessing that is back end DTI?

Do we need to dip into savings to cover the 3.5% or will the money paid in already during the LC be ok?

Re: FHA and buying out rent to own/land contract?

NC_Mtg_Loaner — Mon, 07 Sep 2020 09:09:53 GMT

Keep receipts and paper trail of everything as Judge Wopner used to say--

--all of your monthly rental payments (hopefully you paid by old fashioned check) in order to show where a portion of the payment goes towards Down Payment and/or Closing Costs

--copy of the contract stating these terms

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FHA and buying out rent to own/land contract?

Re: FHA and buying out rent to own/land contract?