An investment property is a property that is not
occupied by the borrower as a principal residence or as
a secondary residence. With permission from the
appropriate HOC, private investors, including nonprofit
organizations not meeting the criteria described in
paragraph 1-5 A, may obtain FHA-insured mortgages
for the following reasons:
A. Purchasing HUD Real Estate Owned (REO)
properties. Owner occupancy is not required when the
jurisdictional HOC sells the property and permits
the purchaser to obtain FHA-insured financing on the
investment property.
B. Streamline refinancing without appraisals. See
paragraph 1-12 for additional qualifying information.
C. Underwriting Considerations:
1. Individual investors who credit qualify may assume
mortgages made on investment properties. This
applies to the transactions described in
paragraphs 1-4 A and B, as well as to investment
properties purchased before the 1989 ban on
investors that have been subsequently
streamline refinanced.
2. Qualifying ratios, the treatment of projected rental
income, etc., are described in Chapter 2, paragraph
2-7 M.
3. ARMs and graduated payment mortgages (GPMs)
are not permitted on investment properties.
4. Except for streamline refinances in which the
mortgage was originally insured in the name of a
business, FHA will not insure loans made
solely in the name of a business entity (such as a
corporation, partnership, or sole proprietorship) or
trust. One or more individuals, along with the business
entity or trust, must be analyzed for creditworthiness.
The individual(s) and the business entity or trust
must appear on the mortgage note. The business
entity, trust, or individual(s) may appear on the
property deed or title. All parties appearing on the
property deed or title must also appear on the security
instrument (i.e., mortgage, deed of trust, security
deed).
occupied by the borrower as a principal residence or as
a secondary residence. With permission from the
appropriate HOC, private investors, including nonprofit
organizations not meeting the criteria described in
paragraph 1-5 A, may obtain FHA-insured mortgages
for the following reasons:
A. Purchasing HUD Real Estate Owned (REO)
properties. Owner occupancy is not required when the
jurisdictional HOC sells the property and permits
the purchaser to obtain FHA-insured financing on the
investment property.
B. Streamline refinancing without appraisals. See
paragraph 1-12 for additional qualifying information.
C. Underwriting Considerations:
1. Individual investors who credit qualify may assume
mortgages made on investment properties. This
applies to the transactions described in
paragraphs 1-4 A and B, as well as to investment
properties purchased before the 1989 ban on
investors that have been subsequently
streamline refinanced.
2. Qualifying ratios, the treatment of projected rental
income, etc., are described in Chapter 2, paragraph
2-7 M.
3. ARMs and graduated payment mortgages (GPMs)
are not permitted on investment properties.
4. Except for streamline refinances in which the
mortgage was originally insured in the name of a
business, FHA will not insure loans made
solely in the name of a business entity (such as a
corporation, partnership, or sole proprietorship) or
trust. One or more individuals, along with the business
entity or trust, must be analyzed for creditworthiness.
The individual(s) and the business entity or trust
must appear on the mortgage note. The business
entity, trust, or individual(s) may appear on the
property deed or title. All parties appearing on the
property deed or title must also appear on the security
instrument (i.e., mortgage, deed of trust, security
deed).
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What is considered a
investment properties?
investment properties?
