Mortgage Navigator • Conventional • Can This Be Done?
Buying From Family or a Related Party
A relationship between buyer and seller does not automatically kill a conventional purchase.
Fannie expressly allows many of these purchases
Fannie defines a non-arm's-length transaction as a purchase where the buyer and seller have a relationship or business affiliation. Existing-property purchases are generally permitted unless a particular scenario specifically prohibits them.
New construction is different
If the borrower has an ownership interest in, or employment relationship with, the builder, developer or seller of newly constructed property, Fannie limits the eligible transaction to a principal residence.
Important exception: Fannie's delayed-financing exception requires the original cash purchase to have been arm's length. A family/related-party cash purchase may therefore block that specific exception even though the original purchase itself was financeable.
Official agency baseline
Fannie Mae Selling Guide · Freddie Mac Seller/Servicer Guide
These are agency-level rules. AUS findings, mortgage insurance, product restrictions and lender/investor overlays can still affect a real loan.