FNMA will count lease option higher rent towards down payment

[Chris Mason]

Who knew? Take a look at this little guideline from the 2005-2007 era that doesn't appear to have been significantly revised:

The biggest problem I see here is that FNMA isn't going to honor whatever you write as the rent credit towards down payment in the lease and/or option agreement. They are going to use the appraiser's TODAY number for fair market rent, take the difference between that and what the tenant-buyer has been paying for the PAST year, and count the cumulative difference towards down payment. 

This means that if you sign a lease to pay $2400/mo when fair market rent is $2200, and then a year from now the appraiser says today fair market rent is $2400/mo, you'd get nothing to count towards the down payment. You could still count the above market rent towards decreasing the purchase price, it would just be that a normal down payment on that purchase price will be required.

So this probably isn't much use in hotter markets like the Bay Area, but for those of you out in places where rent doesn't go up a zillion percent per year, this could be viable. If appraised market rents a year from now say it's a $1100/mo place, and the tenant has been paying $1400/mo for a year, that's $3600 towards the down payment. If it's a $100k property, by my math we've got 3.6% down which could work for Fannie's 97% LTV program, and all we've got left is closing costs.