Can my buyer re-fi with FHA?

I sold a home last March to a sub-prime buyer. I carried back 16.2K and told them if they got their credit in line (they were 550 last year) if they could re-finance me in a years time I would eat half of their mortgage.

How long do they have to be on title for their home before they can re-fi with FHA? I say FHA cause its my understanding they handle subprime borrowers.


last time I checked FHA requires a 620 FICO. check with a reputable FHA approved mortgage broker in your area.

Or if you’re interested in unloading your 16.2k note let me know :banana

I’ve had two mortgage brokers (FHA approved) who I trust tell me that got a 490 and a 534 done over the past couple of months.

Now they had decent downpayments and their DTI was strong. Obviously it must have to be with those FICO’s.

My scenario is…re-fi at 72K. Appraisal came in at 88K last year. I think its worth 82-85K. If their FICO is at a 600 with a decent DTI I’m hoping they have a chance.

I made this deal with the homeowners so they would have something to work for in regards to their credit. I’m getting .50 on the dollar for this throwaway second if they cash me out, otherwise I have a 16.2K payday in a years time. I have a hard time believing its worth .30 on the open market. You want to give more than .50 on the dollar I’m all ears :biggrin


FHA has no inimum credit score requirements. Many lenders will put their own requirements in place just to be on the safe side. Have the people made all of their payments on time? They may have a pre-pay as well.

Like Chris just said and has been said before, FHA is not score based.

They are mainly going to look at their DTI and credit HISTORY (last 12 mos mainly). If their history is clean and DTI is in line, you should be able to find a good FHA lender to do it.

As for the seasoning, they should be able to R/T refi 1 day in using acquisition cost as the appraised value. If you’re outside of the 12 mos, then they can use the new appraised value.

Are there any lenders doing refinances of properties with a substantial increase in appraised value in a short period of time. I had purchased a home for 138K in August, put a bunch of money into it and have recently got it appraised through an FHA approved appraiser for 250K. Unfortunately, my broker failed to look into the guidelines close enough, as FHA guidelines use the lower of the purchase price or appraissed value if it is within twelve months of acquisition. I have found other lenders allowing the appraised value to be used after six months, although I need the money now and haven’t had much luck with good rates with the other lenders. Are there any FHA approved lenders that can make exceptions on using the appraised value? Any other ideas on a way to get some of my money out now? This is a three family house and I currently occupy one of the units.

It’s not the lenders, it’s FHA. Their guidelines don’t allow you to use the new appraised value within 12 mos.

You might be able to go regular conventional cash out through a fannie mae lender depending on the other aspects of the loan (DTI, Credit, Income). FNMA will allow you to use the new appraised value with no seasoning as long as it is a legit appraisal, and you may have to show what you did to the property. With a 3 unit owner occ, you’re going to be maxed at 75% LTV on a cash out refi.

Yeah, the only problem is that I have a lot of credit card debt that is lowering my credit score to the low 600’s. The refinance would pay off all the debt and return my score to the mid 700’s, although I can’t find a conventional lender with underwriters that understand my situation. They have strict guidelines regarding credit score, etc… and they won’t give me an exception understanding that my credit score will increase dramatically once I get the money off of my revolving accounts. My credit report doesn’t show any late payments, etc… only an excess of money on my revolving accounts. The credit crunch has made this very difficult for me to tap into the $112,000 worth of equity in the property. Does anybody have any other suggestions?

Sell the other two units individually.

Thanks for the advice, although splitting a three family house into a condo conversion would just create more problems and cost more money than it would be worth. I need to either wait it out for several months or find a lender that will allow me to use the new appraised value to take a second or refinance the first.