FHA Kiddie Condo Loan
A great way for
young adults to get started buying their first home is by
using the FHA "Kiddie Condo" Loan Program. This type of
mortgage allows a person to co-borrow with a blood relative (eg.
parent, grandparent, sibling, etc.) who helps qualify for the
loan using their income or assets. Both borrowers take title
to the property and sign for the loan.
There are three big advantages to using this type of loan.
1. A low down payment (as little as 3% of the purchase price).
2. A lower, owner-occupied interest rate on the mortgage Vs
the higher investment property interest rate.
3. Helps the new borrower establish a solid credit rating.
With a Kiddie Condo loan program, at least one borrower must occupy the property as his/her
primary residence, but extra bedrooms could be rented out to
help cover the cost of the mortgage payments. This is a
perfect way for a college student, recent graduate, or anyone
unable to obtain a loan on his/her own to buy a condo or townhome
or single family home with the help of a family member.
Apply for your Kiddie Condo loan
The tax benefits, such as deducting mortgage interest and real
estate taxes on a Federal Income Tax return, can be divided
among the owners, according to who pays the expense. See your
tax advisor for details.
Make sure you
read the section on credit
as both borrowers must qualify. If the owner occupant
has little or no credit you should review the "non
traditional credit" section and pay particular attention
to the information on the 2nd page.
Note that the
property DOES NOT have to be a Condo.
If it is a condo then you need to make sure that the project
is approved or the that the property can get a "Spot
approval". Please see the Condo
section for more information.