Short answer
Yes. Fannie Mae treats a new loan that pays off an installment land contract (also called a contract for deed) as a purchase if the contract was signed within 12 months before you apply, and as a limited cash-out refinance if it's older. FHA treats a home bought on an unrecorded land contract as a purchase, and paying off a recorded land contract as a no cash-out refinance. Cash-out isn't allowed on these payoffs under Fannie Mae's rules.
What's the difference between a land contract and owner financing?
With an installment land contract, sometimes called a contract for deed, the seller usually keeps legal title until you've paid the contract off, and you make payments to the seller. With other kinds of owner financing, the seller deeds the home to you and holds a mortgage, the same way a bank would. Paying off a seller-held mortgage is generally a regular refinance. The rules below cover land contracts.
How does Fannie Mae treat a land contract payoff?
- Signed within the last 12 months: the new loan is treated as a purchase. The loan-to-value ratio is based on the lower of the appraised value or your total cost: the contract price plus documented costs for rehab, renovation or energy improvements.
- Signed more than 12 months ago: the new loan is treated as a limited cash-out refinance, with the loan-to-value based on the current appraised value.
- Cash-out: a cash-out refinance that pays off a land contract isn't eligible.
Keep receipts for work you've done, since documented improvements can count toward your cost.
How does FHA treat it?
HUD's Handbook 4000.1 says a home being acquired through an unrecorded land contract must be treated as a purchase. If the land contract was recorded, paying it off is a no cash-out refinance, and the amount owed on the recorded contract is treated as the existing loan balance. See the FHA loan guide.
What records should I gather?
- The signed land contract and any amendments, and whether it was recorded at the registry of deeds.
- A payoff statement from the seller showing what you still owe.
- Proof of the payments you've made, such as canceled checks or bank statements.
- Receipts for any repairs or improvements you've paid for.
To check what's recorded, see how to look up a deed in NH.
When should I start?
If your contract has a date when the remaining balance comes due, start well before it. Your credit, income and the home's appraisal all need to line up, and title work can take longer when the seller still holds title. See when to refinance and rent-to-own and rent credits.
Sources
- Fannie Mae Selling Guide, B2-1.3-05, Payoff of Installment Land Contract Requirements (12/11/2024)
- HUD Single Family Housing Policy Handbook 4000.1, Update 18 (August 2026), Purchase/Construction to Permanent; No Cash-Out Refinances
Checked November 2, 2026. Rules and dates change, so confirm current details before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.