Obtaining an FHA Loan backed with a Private Money Lender Work?

Question

So far I've been a member of BP for about a good week. All this wisdom and wonderful knowledge that you guys are giving away is astonishing, and even from just reading some of the other members success story makes me wonder why aren't others trying to do the same. But I know analysis paralysis is a very big thing and it can be hard to surpass, and listening to yesterday's podcast and Kevin speaking about people being scared to jumping they can read and read all they want but unless they go threw that first deal, no reading can save you from fear than actual experience. With that said...

Building my own credit at my age (19) would be one of the best course of action at this time while also building up a good nest egg of funds for future investments. So far I've already have a credit history of about 1 year but I know I should be trying to hit the 750+ score and so far my report is not there yet. I've been thinking of probably more creative ways to be able to start my investment career and to actually put my foot out there, since listening to the BP Podcasts one of the main fall backs in beginners is that they never take a dip in the pool. Personally knowing that everything is possible if I search and persistently ask enough it can be achieved; so with that said would a FHA loan backed by another initial private lender loan work? if its used as the down payment for the FHA loan while also providing proof of my current income to help meet the requirements to qualify.

Would really appreciate what methods or your overall insight in how this situation can be approach.

Chris Mason · Answer

You could do it, but it would likely be mortgage fraud.

Victor Crispin · Answer

Thank you @Chris M. didn't really know that it would be mortgage fraud. And actually @Matt Motil thanks for the great response. Now that I think about it your right about the private lender unless I can offer them some type of deal but contacting my family should be a great idea as well. My goal for the year is to at least have this FHA Loan per-approved, while working as a assistant for this local brokerage that's hiring to save up for the down payment.

Matt Motil · Answer

FHA requires 3.5% down. What is sounds like you are wanting to do is borrow the 3.5% to acquire the FHA loan. This is basically one of the strategies of the subprime lending schemes that took place in the past. Lenders will look at the past three to six months of bank statements to make sure you have the funds and that the funds didn't just magically appear in your account a month before you walked into the lenders office. It sounds like the private lender will have nothing to secure their interest in their money, so I would try to find someone like a friend or family member. If you can do that, they can give you a gift which can be documented and then everything is above board.

Obtaining an FHA Loan backed with a Private Money Lender Work?

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