Fannie Loan Guidelines: Refinancing non-arms length, seller carry

[Nathan H.]

Hi BP community!

I'm having a hell of a time trying to find guidance on conforming guidelines for a particular refinance I want to do and am hoping someone has some advice.. 

I'm buying a duplex from my mom that she owns free and clear. I will be careful to make it as much of a normal sale as possible. I'm buying it for the actual value (about 500k) and putting down 25% in cash that can be sourced as being my money. The rest will be seller financing with a normal rate and term. I want to get her the rest of her cash by refinancing shortly after (we do not want to sell the note for various nuanced reasons). In this scenario, there is no cash-out aspect, just a refinancing of an existing first loan. The complexity is that the note holder is my mom, it's a duplex and will be used as an investment property by me, with her leasing one of the 2 units for a few months until she moves into her free-and-clear cabin. Any advice on conforming guidelines would be greatly appreciated! Thank you!

Also, she is not financable, so creative solutions involving her being a part of the lending process are not options unfortunately. 

[Kevin Romines]

I guess I'm not understanding why you aren't just doing a purchase? You have the 25% down that is required? The fact that she will be renting one of the units doesn't have to be a consideration. The appraiser will show what market rents per unit will be and the other unit should have a lease in place. 

I think by treating it as a owner financed transaction to get on title, then doing a refinance just makes things a bit more complicated than it needs to be?