Get Identity Of Interest

*Maximum LTV for Identity of Interest transactions is 85%. **If the borrower's minimum decision credit score is > 580 then the borrower eligible for max financing. If the borrower's minimum decision credit score is between 500 and 579 then the borrower is limited to a maximum 90% LTV.

When applying for an FHA loan, the identity of interest means there's a preexisting connection between the property's buyer and seller(s), such as a family or a business relationship. This can refer to a transaction between a parent and child, a corporation and employee, or people related through other affiliations.

An arm's length transaction is one where the buyer and seller don't have a pre-existing relationship. Mortgage lenders in short sales often want both parties to confirm that the sale is an arm's length transaction.

FHA defines an “Identity of Interest” as any relationship where the purchaser and seller are related, and/or affiliated through a business relationship. This could, for example, be parent/child as buyer/seller, corporation selling to an employee, persons who are partners in other projects as buyer/seller.

In a non-arm's length transaction, there is a preexisting relationship between the buyer and the seller. In an arm's length transaction, there is no preexisting relationship between the buyer and the seller. If your parents sell you their old beater car, that's a non-arm's length transaction.

An arm's length transaction serves as a basis for figuring out fair market value (FMV). This value is the estimated price of a property based on what a buyer would pay based on values in the current real estate market.

An Arm's Length Transaction refers to a transaction between unrelated parties who are each acting in their own best interest.