We have just learned that FHA has made a change to their identity of interest rule.
If a borrower lives in a house and then decides they want to purchase it and executes the purchase contract after they have already moved into the home, this would be an identity of interest transaction and the borrower would be required to occupy the home for 6 months before the purchase contract can be executed or the LTV would be limited to 85%. Essentially, the buyer/seller would need to execute a new contract after the 6 months occupancy period to allow for maximum financing.
If a buyer and seller execute a contract and then after that contract date, the buyer moves into the property being purchased, the 6 months of occupancy is not required in order to allow maximum financing.
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