BluefoxToday blog : Wanna Kill Your Transaction? Move in Before Your FHA Loan Closes!

Wanna Kill Your Transaction? Move in Before Your FHA Loan Closes!

Listing Your Las Vegas HomeI am beginning another series about “Things That Can Make Your Las Vegas Financed Home Purchase *Blow Up* in the Middle of a Transaction.”

My ultimate goal in this series is to make Las Vegas Home Buyers aware of the challenges of a specific home’s eligibility for financing.

Congratulations!  Your lender just approved you to purchase a Las Vegas area home by looking at your check stubs, debt to income ratio and you are now approved to purchase a Las Vegas area home!

Hold the phone here, *you* may be eligible to purchase a home but is the house eligible for financing?  This series is designed for you to research a home’s eligibility for financing.

DISCLOSURE:  I am not a lender, title company, home inspector, contractor or appraiser.  I am only speaking from personal experience by working with financed Las Vegas area home buyers.  Hopefully you have hired a Las Vegas area real estate agentwho will be able to spot things that can *potentially* cause problems with your financing (mostly FHA/VA) before your contract to purchase a Las Vegas area home.

Much of Las Vegas is currently priced in fire sale status.  Many times when you see unusually inexpensive homes there is a reason – they are not eligible for financing and the seller does not wish to rehabilitate the home to make it eligible for financing.

As I discussed in my last post in regards to difficulty in closing a transaction, sometimes buyers cannot efficiently coordinate a smooth close and they must find alternate housing.  Sometimes the bright idea pops into their head that they can rent their new house until it closes.  This is fine and dandy in the cash & conventional purchase world but not such a bright idea in the FHA financing world.

FHA has a little obscure rule about this – tenants must occupy the property for more than 6 months prior to purchase.  It is very easy to get antsy while a buyer is waiting for a short sale lienholder(s) approval or trustee sale flip deed seasoning.

I have seen buyers move in prior to their property closing only to kill their own deal.  Sometimes they will make arrangements directly with the sellers and cutting out the agents that are actually representing them.  While not all agents (and I have even heard of some lenders) know about this rule for loan approval, it is always best to NOT make arrangements or change the terms and conditions of your contract without your agent’s knowledge!

While moving in to your new home prior to close seems like a win-win for both the seller and the buyer – The best thing to do when it is time for you to move and you haven’t closed on your new home purchase yet is to:

When you are that close to closing, you do not want to ruin your transaction!  The sellers may not want to extend the contract for another 6 months to wait for you to qualify to purchase the home!  Always have a “Plan B” prior to purchasing.

Thanks,  Renée Burrows 702-580-1783 Broker/Owner, REALTOR®


copyright 2006-2013 Renee Burrows, REALTOR®, Savvy Home Realty Solutions  702-966-2494

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Comment balloon 64 commentsRenée Donohue • November 08 2010 07:43PM


Great information, Renee! I often have to explain to buyers that the house they want to look at is not going to work because of their FHA approval status.

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - over 7 years ago

I have a client that wants to put an FHA offer in on a house Right Now, even though he has an FHA mortgage on the house he owns. He's having his roommate at the original house assume it, but it's still gonna take a few weeks at best. Now that i'm thinking about it, I wonder if there are any time stipulations on getting a new FHA mortgage?

Posted by Eric Michael, Metro Detroit Real Estate Professional 734.564.1519 (Remerica Integrity, Realtors®, Northville, MI) over 7 years ago

Great info and learning.  Thx for continuing my education in the many complexities of real estate.  I've learned a ton here.

Posted by Debbie Gartner, The Flooring Girl & Blog Stylist -Dynamo Marketers (The Flooring Girl) over 7 years ago

Donna:  It is really difficult in this environment!

Eric:  WOW!  That is one out of left field.  I would definitely speak with an LO on this one and then write a blog post to educate us!  I know the former FHA mtg has to be paid off to get a new one but I am not sure how an assumable is looked at!

Debbie:  You are welcome!

Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 7 years ago

Renee, I can't even remember the last time anyone had advance occupancy on any house I either listed or sold. It just does not happen around here. Way too much liabilncy! Great post.

Posted by Barb Szabo, CRS, E-pro Realtor, Cleveland Ohio Homes (RE/MAX Trinity Brecksville Ohio) over 7 years ago

I too want to hear how that works out Eric. I believe once assumed, he is fine to have a new FHA loan. That is my understanding. This is good info Renee I didn't know about the term for renting. Thank you.

Posted by Scott Baker, Realtor Homes for Sale in Cincinnati, West Chester, Mason, OH Area ( Coldwell Banker West Shell) over 7 years ago

Barb:  The liability is too great!

Scott:  I believe we are going to see many assumables come up in the near future when interest rates go up so that would be great info to know!

Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 7 years ago

This is very good information.  Thanks for sharing it this evening.

Posted by Richard Ruggaber, California Real Estate - (818) 422-5035 (Metro Life Homes) over 7 years ago

Renee - I know the mindset of buyers is why not move in early especially if the house is "just sitting there" vacant.  Regardless if it's my buyer or seller I never advise early occupancy.

Posted by Michelle Gibson, REALTOR (Hansen Real Estate Group Inc. ) over 7 years ago

Renee, I thought I knew everything and even I didn't know that!  Thanks for telling me.

Posted by Damon Gettier, Broker/Owner ABRM, GRI, CDPE (Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert) over 7 years ago

Renee - I have never been involved or would I ever. It is nice of you to educate those that were unaware.

Posted by Ken Barker Realtor® GRI, E-Pro Certified (Dilbeck Real Estate) over 7 years ago

Post closing occupancy agreements, yes, we can accommodate that.  Pre-closing occupancy, not so much!

Posted by Kevin J. May, Serving the Treasure & Paradise Coasts of Florida (Florida Supreme Realty) over 7 years ago

This made me think back to 10 years ago when I purchased my first home.  We moved in 5 days before closing and only after I became an agent did I find out how lucky I was that the sellers agreed to it.  It's something that is always frowned upon due to liability issues.

Mine was a conventional loan though. =) 

You have some of the most informative posts for your customers Renee!

Posted by Maggie Dokic | Miami, FL | 305.81.HOUSE (46873), GREEN, CDPE, SFR, Pinecrest | Palmetto Bay | (eXp Realty LLC) over 7 years ago

I learned many years ago to avoid at all costs, pre-settlement occupancy by buyers or post-settlement occupancy by sellers.

They are a catastrophe waiting to happen.

In today's world of short sales and foreclosures, the matter shouldn't even be considered. 

My solution to home buyers who need short term occupancy while waiting for settlement is to just bring them home with me.

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley,, MD & VA Homes and Real Estate) over 7 years ago

Good information...I like Lenn's solution!  I wonder if she'd take some out of town visitors!

Posted by Laura Giannotta, Your Realtor Down the Shore! (Keller Williams Realty - Atlantic Shore ) over 7 years ago


I've always avoided pre-settlement occupancy agreements. This is another great reason.


Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) over 7 years ago


I have learned that is there is a way to blow a loan these days, the borrower will find it!

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) over 7 years ago

Richard R:  You are welcome!

Michelle:  A vacant home is all too tempting!

Damon:  Food for thought huh?

Ken:  Many do not know and I have seen agent-friends transactions go south because of this rule!

Kevin:  LOL!

Maggie:  Thanks, probably because I have seen a lot in this market!

Lenn:  LOL @ bringing them home with you.  In my situation, I would be running a transient hotel!

Laura:  Hee hee!

Richard I:  It sure is a great reason!

Richard W:  LOL so true!


Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 7 years ago

Thanks Renee

I like others want nothing to do with pre occupancy. It is sometimes difficult to get it through the buyers heads the complications it can cause. Thanks for the information!

Posted by Surprise Arizona Realtor Jim Braun Sun City Grand Active Adult Communities, Surprise AZ real estate Phoenix West Valley (Coldwell Banker Residential Brokerage Jim Braun Sun City Grand Az ) over 7 years ago

Hi Renee, Boy you hit the nail on the head here.....Don't move in early and keep the buyer and seller apart!  Don't let them get chummy and blow the deal...

Posted by Brin Realty Associates Team At Bean Group, Amherst NH homes and Southern NH real estate (Bean Group | Brin Realty Associates) over 7 years ago

Renee this is the perfect definition of cutting off your nose despite your face!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 7 years ago

Thanks for alerting us to this, Renee. Rarely does this crop up but it is great to know the real deal in advance!

Posted by Irene Kennedy Realtor® in Northwestern NJ (Weichert) over 7 years ago

Renee, this is sound advice. Anything can happen during a pre-occupancy. Thanks.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA over 7 years ago

Jim:  You are welcome!

Rene:  I think you said something very important in regards to letting the buyer and seller get "chummy"!

Bill:  Good analogy!

Irene:  I had one buyer who wanted to move in early last year and said nonono ask your LO!  She said NO!

Michael:  You are welcome!

Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 7 years ago

Great post and a great reminder for all of us!

Posted by Carol Andersen, NW Floridanulls Real Estate Pro, TRC, ICREA (Navarre Beach Agency) over 7 years ago

Cool, I've never actually heard of this stipulation within the FHA guidelines.  I was working with a client who was purchasing a foreclosure home and they moved in prior to COE, without the bank/sellers permission.  It was crazy....  The transaction fell through.  The sheriff came out and made them vacate within 5 days. 

Posted by David Krushinsky (Skyline Home Loans - NMLS 202115) over 7 years ago

Carol:  Thanks!

David:  OUCH!

Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 7 years ago

Thanks for the great info. I wish we had a conventional product that would allow people to buy with a low down payment without having to deal with FHA guidelines.

Posted by Dustin McClure (Mossy Oak Properties Outdoor Realty) over 7 years ago

I think everyone needs this information.  I definitely plan on reposting.

Posted by James McGary (Agents Set Free, Inc) over 7 years ago

Thank you for this information. I did not know about the renting issue with FHA.

Posted by Kristi Hancock (SEI Real Estate Professionals) over 7 years ago

Renee, thanks for bringing this obscure rule to our attention.  I don't believe in allowing buyers to move in before the settlement in any case - too many things can go wrong.

Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) over 7 years ago

Renee - I like your series, it's a very cool idea. You are right, the tempation of a vacant home is tough to resist for most buyers.

Posted by Larry Brewer - Benchmark Realty llc (Benchmark Realty LLc) over 7 years ago

Renee - excellent post and thanks for the info. This is an obscure rule, and I appreciate the information.

Posted by Sharon Paxson, Newport Beach Real Estate - Arbor Real Estate (Arbor Real Estate) over 7 years ago

I wasn't aware of this FHA....move in etc.....however, I was very tempted to let a buyer move-in a few months ago and then I read posts on the subject. I immediately withdrew the thought. There is too much that can go wrong and not everyone plays by the same rules when under pressure.....Good post and thanks

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 7 years ago

Great post.  It's hard enough to keep FHA Clients form buying furniture before the loan closes

Posted by Pat & Steve Pribisko (Keller Williams Greater Cleveland West) over 7 years ago

Great information...  It is so important to stay ontop of this ever-changing market!

Posted by Jody Munn (Charlotte Area Real Estate) over 7 years ago

Great information about occupancy (I didn't know that, it's never come up for me before).

Someone upthread mentioned having 2 FHA mortgages at the same time. It's a little known fact that you CAN have 2 at once if the new home is being bought because the old one was 'outgrown' by the family. I had a client who'd had 3 children since they bought their first home. They moved from a 3BR to a 4BR and both had FHA mortgages. They did have to justify it but it didn't take any longer than a typical escrow.

Posted by Julia Odom, Chattanooga Homes for Sale (Select Realty Professionals) over 7 years ago

Another reason to add to the list of potential pittfulls that most people don't think about. Also adding to the list of why pre-closing occupancy is always a bad idea.

Thanks for the post Renee

Posted by Greg Miller, Florida Home Loans - Conventional,FHA,USDA,VA (Ruoff Home Mortgage ) over 7 years ago


Anytime a client excludes the agent from details that alter the deal its a bad idea. B A D idea. It baffles me how some people think they don't need to let the agents know or at least run the idea by their agents.


Posted by Brent & Deb Wells, Prosper TX (LivingWell Properties) over 7 years ago

Good information Renee, although I rarely(almost never) work with FHA sales.  if I do, I won't make that mistake.  Thanks for the info.

Posted by Jeff Harris, Selling Austin. Every Day over 7 years ago

I just had someone ask for this and they are getting an FHA loan...I am really glad I am not a fan of early possession. I didn't know this. If only it was EASY to know all the rules.

Posted by Dawn Maloney, 330-990-4236 Hudson & Northeastern Ohio (RE/MAX Haven - Northeast Ohio Real Estate Specialist) over 7 years ago

Good to know!  There's always some little "nuance" and the devil is sure in the details, as they say. 

Posted by Carla Muss-Jacobs, Principal Broker (503) 810-7192, Buyer Focused ~ Buyer Results ( | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time) over 7 years ago

I would not ever recommend this to anyone I'm working with and or representing.  It ain't over till it's over as they say.

Air on the side of "caution"


Patricia/Seacoast NH & ME

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) over 7 years ago

I did not know this.

My take has always been that moving in prior to closing is good for no one. The buyers get too much time to look around and find "reasons" not to close.

It can also set up a tenant situation with the possibility of eviction if the home does not close which costs the seller time and money. 

Posted by Michael Simcock, Elk Grove, CA Realtor 916 425-1084 (Coldwell Banker (Elk Grove, CA)) over 7 years ago

This is interesting...I knew about the tenant rule with FHA, but didn't necessarily think that would translate to pre-close interim occupancy. I try and avoid that at all costs, but have done it for my buyers occasionally. Never on an FHA loan...mostly because they are too tricky and any little thing can cause them to die, but still....would not have thought about this. Wow....I really do learn so much on Active Rain lol

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) over 7 years ago

Renee ~ Thanks for sharing. No one wants something like this killing a deal.

Posted by Diane M. Phillips Realtor 443-286-4365, Specializing in Carroll Co., MD (Frankly Real Estate Inc.) over 7 years ago

We haven't even discussed liability.  What if the buyers (not owners yet) move in and trip over the threshold or cause a fire, who is responsible?   The sellers who no longer live on the property have no control. 

Getting back to the FHA requirements; Julia stated one can have two FHA loans.  I just came back from a meeting with an Underwriter who stated that one can have only one FHA loan at a time.  I would like to know if there are any underwriters out there reading this blog who could confirm or deny this claim.

Posted by Anja Kerstens, GRI, CDPE, CHS, ASP, Selling Silicon Valley Real (Coldwell Banker Residential Brokerage) over 7 years ago

There are many other reasons not to move in early, namely, they might not like something about a neighbor and try to back out or some other bizarre thing. 

Posted by J. Philip Faranda, Broker-Owner (J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY) over 7 years ago

I once gave a set of keys to a buyer prior to move in.... he said he just wanted to move some boxes in the garage. Ultimately he moved in - EVERYTHING. Luckily we closed and funded on time. The seller wasn't very happy about their decision to give up the keys earlier.. Damn good thing we had no problems. I will never agree to that again!

Posted by Greg Nino, Houston, Texas (RE/MAX Compass, formerly RE/MAX WHP) over 7 years ago

Hey Renee,

Nice format on your post. It is advice like this that is needed by buyers before they make the mistakes. They would be smart to hire you!

Posted by Ross Quintana, Real E Smarter Real Estate Coach - 509-362-1966 (Real E Smarter) over 7 years ago

It is never a good idea to allow occupancy to a buyer before COE.  This is a nightmare waiting to happen.  Suggest they go to Oakwood or some other short term rental facility.

Posted by Simon Mills (Mills Realty) over 7 years ago

FHA has a little obscure rule about this – tenants must occupy the property for more than 6 months prior to purchase.  It is very easy to get antsy while a buyer is waiting for a short sale lienholder(s) approval or trustee sale flip deed seasoning.

I had not idea, but in my area, we never let buyers move in early. Too much risk, too much liability. Thanks for the heads up.

Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 7 years ago

Renee - Thank you so much.  This is  timely information for me, as it will avoid a potential headache in one of my deals.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 7 years ago

Very good post, allowing buyers to move in prior to closing will invite trouble

Posted by Veronica Swan (ERA Belsito and Associates) over 7 years ago

Excellent advice Renee!

Posted by Ellen Wright Adams, LoansByEllen- Licensed in Oregon (Academy Mortgage.......We are a Equal Housing Lender) over 7 years ago

Very good information, I had no idea about the 6 months.  I've learned something new, so today is a good day. 

Posted by Tracy McPeek over 7 years ago

I had not connected the tenant rule to pre-closing occupancy.  Thanks for the education.

Like many others here, I try to pre-closing occupancy, whenever possible.  More often than a buyer requesting an early move-in, I find buyers wanting to perform work prior to closing.  I have to tell these buyers over and over that that is a huge NO NO!

Posted by Mike Weber, 40+ years in Northern Colorado (Keller Williams Realty Northern Colorado) over 7 years ago

Wait wait wait. How many times we see this -- and I always advise please do not move in early.

Posted by Erica Ramus, MRE, Schuylkill County PA Real Estate (Erica Ramus - Ramus Realty Group - Pottsville, PA ) over 7 years ago

Hey all - thanks for the comments!

Dustin #28:  Don't we all :wink:

Pat & Steve #35:  Great idea to add to the series.  This series will probably be ongoing for a decade, LOL!

Anja #48:  I do understand that one can have multiple FHA loans for extenuating circumstances so Julia is right.  I did have a buyer last year go FHA because she couldn't communte from her FHA financed New Jersey condo!

Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 7 years ago

Hi Renee, I'm learning a lot from your series.  Pre-close occupancy is generally not a good idea.  One of my absentee sellers was not even willing to let the buyers park the moving van in the driveway- 1 day before closing.

Posted by Mary Douglas, REALTOR, Red Feather Lakes, Colorado (United Country Ponderosa Realty, Red Feather Lakes, Colorado) over 7 years ago

Gosh Renee, as a seller I've had buyers wanting to move their stuff into my home before closing, I had to decline.

Posted by Cynthia Bartch, Redesigned Spaces; All Round Nice Gal (Home Stager/Property Stylist & more! Granville, Ohio) over 7 years ago

Mary:  Good plan!

Cynthia:  It is so frustrating.  Everyone wants to time everything perfectly and it just doesn't happen like that anymore!

Posted by Renée Donohue, Las Vegas Real Estate Broker - (Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate) over 7 years ago
You've some helpful points Renee! I am always looking for different articles on interesting subjects. I just bookmarked your blog | Cheers
Posted by Graham Ginsberg, Naples Florida Real Estate Specialist (Sun Realty) over 7 years ago


Getting too creative can dip you into some serious doo-doo.

Posted by Esko Kiuru over 7 years ago

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