We often have parents helping children with limited income buy properties in which the children intend to live. There are 3 options for such parents: (1) FHA financing with the parents signing as a non-occupant co-borrower – requires 3.5% down; (2) Owner Occupied Conventional financing with the parents signing as a non-occupant co-borrower – requires a minimum of 20% down; or (3) Investment Property financing with the parents acting as the primary borrowers – requires 20% down.
Because many condo complexes are not FHA approved, option #1 (FHA financing) is often not available. Owner Occupied Conventional financing with the parents co-signing has more exacting credit and income requirements than the FHA option, making it difficult for many to qualify.
Often the only option is Investment Property financing. The child, however, can be added to title either at or after close.
With all of the above options, if the child is on title and she makes ALL of the housing payments for 6 to 12 months, lenders will consider the child the effective owner/borrower and allow her to refinance the property and the loan completely into her own name, eliminating the parents’ obligation.
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646