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Buying A Home For Your Child – Options?

a young couple sit by windows drinking coffee in their house that their parents helped them buyWHAT IS THE BEST WAY TO BUY A HOME FOR YOUR CHILD?

This is a question we see quite often so I thought I’d list the options.

  1. No Mas “FHA Kiddie Condo” Loans. This used to be a very flexible option where FHA allowed parents to put down only 3.5% in order to help kids buy a home, but it no longer exists. I had to point that out first b/c I used to blog about it often.
  2. Buy as a Second Home. This is an option if parents can convince underwriters that the property is actually a second home, but if they are buying a dilapidated 1 bedroom, $100,000 bungalow in south Tucson, underwriters might be suspicious.
  3. Buy as an Investment Property. This of course works for any property, as long as parents qualify and can have the minimum down payment (15% for conforming and 25% to 30% for competitive jumbo).
  4. Buy On Behalf of Special Needs Child. Parents can buy with “owner-occupied” financing if they can prove their child has special needs (handicapped or disabled).
  5. Co-Sign on Behalf of Child. Parents can simply co-sign for their child too, but the child does need to have adequate credit established. However, the child does not need to have any income.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167