Icgirl, Home Buyer in Woodstock, NY

FHA or not? Trying to buy a 3-family property in New York State, which contains 2 buildings, with my dad (non occupant) as co-borrower.

Asked by Icgirl, Woodstock, NY Sun Aug 1, 2010

The first lender I spoke with - at a Credit Union- said that FHA won't lend on a 3 family with a non-occupant co-borrower. I have a piece of paper stating that as the reason for rejection, but can't tell if it's from the FHA.

Then I spoke with a broker. He said that's not the rule at all. However, he thinks I'll run into trouble because I am on the deed of a house 15 miles away and because it will be difficult to find comps for the property.

Does anyone know the truth? Anyone know what percentage of the rental income I can use toward the loan? (I hear rules change 25% or 10% depending on area.)

I could get myself taken off the deed on the other property (and use it as vacation rental), but how do I further convince FHA that I intend to occupy? I'm self-employed as a massage therapist, but one of the attractions of this property, quite honestly, is that the rental income should mostly cover the mortgage, and i'm gradually becoming disabled with auto-immune illness. Dare I admit it?

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Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Sun Aug 1, 2010
If I understand your explanation of the property correctly, it is a 3 unit property, but consists of one 2 unit and one single unit. That is where you have the problem. Fannie Mae guidelines require there to be exact comps if it is a property like that which is a-typical. From your comment about not finding comps, that is probably the issue. I have no idea why a credit union, who typically don't even do FHA loans, told you that you cannot have a non-occupant co-borrower. Clearly someone who is your father is a relative, so obviously that is not the issue. The other issue is ownership interest in a property that is only 15 miles away. No matter what you try to say about your reasoning, anyone will give you a problem with that one unless you show from tax returns that you are currently renting out that property.
How much do you have for a down payment? You may be able to get a loan from someplace like Ulster County Savings Bank, if you have enough to put down for their guidelines, and you can get over the hurdle of the other property. Because they generally don't sell to Fannie Mae, they would be more likely to go with an odd property.
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