sandwich lease

If my tenant-buyer is going to use fha financing are there any seasoning requirments? I mean will i be able to find a fha lender that does not have seasoning req’s?

Currently, FHA seasoning requirements have been lifted for homes that were bought out of foreclosure. 90 days is standard if that is not the case.

If you are putting someone in on lease/option, routinely, they will need at least 12 months of on time payments in order to apply for new financing anyway, so there should be no seasoning issues if you own the place.

If you are doing a sandwich lease option (as per title), my suggestion is to STOP doing them. They are bad news and with current credit crisis, not even close to the trouble that they WILL bring.


Just completed a sandwich lease about three weeks ago. I was the investor in the middle of the deal between homeowner and my tenant/buyer. I received three years from the homeowner. I sublet the property out to a t/b for one.
I put down one half of one month’s rent as option consideration, ($500). My t/b put down $6K.
My rent was $1K/mo. My t/b’s rent was $1,250/mo.
My purchase price, locked in for three years, was $164K. My t/b’s purchase price was $197K. They spoke with several mortgage brokers, and worked with someone I recommended who is very investor knowledgeable. Qualifying and closing went according to plan.
Do the math. For a $500 investment, I received a healthy return. I’ll take every deal like this I can find. Despite what Chicken Little may say, the sky is not falling. It’s a great time to be a creative investor.

The FHA seasoning requirements have been put on hold for one year for the lenders and their marketing agents who are selling the properties taken by foreclosure. If you buy one of these REOs, the seasoning requirements are still applicable if your buyer wants to use an FHA loan.

AJ I agree with you and did you do a Memorandum of Opt. or Performance Mortgage with the seller.herbster

Memo of Option, Herbster.