Getting it Right The First Time: FHA Rent‐to‐Own Underwriting Rules 

There are very specific guidelines regarding these types of transactions that a buyer and seller must follow in order for FHA financing to be an option. You can be a deal-saver by guiding clients with the right information!

Rent-to-Own Agreements and Rent Credit Rent credit for down payment granted by a landlord to tenant facts:

• Cannot exceed the difference between monthly rent and market rent. (Ex: Landlord collects $1,000 per month and market rent is $800. Only $200 can be applied toward down payment for future purchase.)

• Market rent is determined by appraiser.

• Rent-to-own agreement must be provided to lender. Landlord/Tenant Sales Transactions

• Loan amount will be limited to 85% LTV if there is a family or business relationship between the parties UNLESS:

o Tenant has rented for at least six months (lease or other occupancy verification is required)

o Sales contract is not dated prior to completion of 6-month rental period

"The information provided has been based on rules and regulations issued by Federal Agencies and interpreted for you by MortgageCurrentcy.com. Interpretations are not guaranteed but we attempt to make them both easy to understand and help you

sell more real estate. Check with your local and state authorities to ensure that you meet all requirements and disclosures."

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• Maximum financing (96.5%) is available for landlord/tenant transactions with no family or business relationships with no restrictions on previous rental period.

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