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Can You Close Into a Trust For FHA purchase loans
Can You Close Into a Trust For FHA purchase loans?
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1 Reply
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No, you cannot close into a trust for an FHA purchase loan. According to FHA guidelines, the property must be purchased and held in an individual’s name. Here’s why:
FHA Guidelines on Ownership:
Individual Borrower Requirement: FHA loans were created for individuals buying their primary residence. They do not allow entities like trusts, corporations, or LLCs to borrow money under this program.
Occupancy Requirement: You must move into the house within 60 days of closing and use it as your primary residence. This requirement is intended to ensure that people buy homes with these loans rather than use them for investment purposes.
Transfer to a Trust After Closing:
Permissible Post-Closing: It may be possible to put the property into a revocable living trust after closing, but certain conditions must be met. Lender approval is required for any transfer of title out of your name so soon after taking out an FHA mortgage loan.
Lender Approval: Before making any changes like this, always consult with your loan officer because lenders will want to see a copy(ies) of the executed trust agreement(s) and amendments to it (if applicable) to determine compliance with other applicable state laws that may also govern such transactions.
Alternatives:
Non-FHA Loans: If you need to hold title in a trust at closing, consider non-FHA programs such as conventional financing, which allow borrowers/buyers to put properties under contract subject only to various forms, including inter-vivos trusts where the borrower will have rights under the note and security instrument as well as complete control over said property subject only to notifying their lender in writing via proper channels within specified timeframes stipulated by law pertaining hereunto!
Final Thoughts:
Although you can’t close into a trust for an FHA purchase loan, moving properties into trusts is usually fine after closing with lender consent. If this becomes important to you, talk it out first because there may be some other loan programs that satisfy your needs.