Finally there is a mortgage program available that are designed for when someone is buying a home for another family member. Previously, if someone wanted to buy a home to have their elderly parents live nearby, unless it could be classified a second or vacation home, the borrower would need to use non-owner occupied financing (much more expensive in rate and cost than owner occupied or second home financing).
In addition to helping out the folks, this new program, the Family Opportunity Mortgage, works for parents buying a home for their college student and parents who would like to help their disabled adult child buy a home.
Here’s the skinny:
Assisting a College Bound Student
- The child must be enrolled in college.
- The property must be located close to the college the student is enrolled.
- Property must be a reasonable distance from the parents home.
- Property cannot be rented and the child must occupy the property for a minimum of one year.
- Parents cannot own another second/vacation home in the same location as the student’s home.
- Parents qualify for the loan, the child does not. If the child is old enough, they can be on the mortgage with the parents, however it’s not
qualifiedrequired.
Assisting an Elderly Parent
- Elderly parent must have insufficient income to qualify for a mortgage or be unable to work.
- The individuals qualify for the loan. The parents can be on the mortgage although it is not required.
- There are no distance requirements between the elderly parent and the individuals (their child).
Assisting a Disabled Adult Child
- Disabled adult child must have insufficient income to qualify for a mortgage or be unable to work.
- The parents qualify for the loan. The parents can be on the mortgage although it is not required.
- There are no distance requirements between the elderly parent and the individuals (their child)
- Disabled adult child occupies the property as their primary residence.
- Parents may all ready own their own primary residence.
It’s about time! 🙂
It is good to hear more programs are available. There are a couple of major A paper lenders who have fairly flexible guidelines. We call the Kiddie Condos. I closed a couple this year. What is nice is that they are considered primary residences and the qualification is based purely on the strength of the parents.
Hi Russ, another plus is that the students can be on the mortgage with their parents which will help them establish good credit.
Rhonda,
Thank you for touching on this. This is news to me and also something that I am glad to see. Thanks again.
Sounds like another loophole to investment property financing.
This is a great subject as I had a customer come to me for a loan with this very scenario, She wanted to purchase a home for her disabled son, She had gone to B of A, WaMu and Countrywide and all of them qouted her investor pricing.
Not one of the mortgage consultants new that FNMA has a provision for such a scenario and that she could actually purchase as Own Occupying or O/O.
This was a great new to her.
Great post and I would like to know more specific about the particular product you are talking about is it something a little different then this product?
ubersalad, the guidelines are pretty specific and the program is created so that when people are buying a home for their parent or child, they won’t have to pay NOO rates.
If a lender found that the property was actually investment and not used for family, they could probably call the note due.
Susan, Fannie and Freddie products work with this program. 🙂
If everyone follow the rules, mortgage wouldn’t implode. Trust me, by having this program, it is merely allowing people to use another loophole AGAIN.
ubersalad, it’s a full doc loan and the relationships and purpose of the loan are documented as well.
If someone is found committing fraud, actions would be taken.
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Rhonda – This is a great program to know about. It just shows the true difference between mortgage professionals who understand the wide range of financing options available to home owners vis-a-vis the phone jockeys pitching programs off a two-program rate sheet. Thanks for sharing.
Thanks, Morgan. It’s nice to share a positive mortgage story. 🙂
So are you a correspondent lender with Chase?
Yes, Mr. Snappy. We are correspodent with many lenders… Chase is just one of them. Looks like you are too if you’re linking onto their b2b site. Are you?
uberdubersalad,
This program’s been around for awhile. They simply haven’t trademarked it like they have now. It’s simply a “Non-Occupant Co-Borrower” program that’s been highlighted.
Interfirst was doing them at least 2 years ago.
David, There are differences between this program and a “non-occupant co-borrower”.
This program does not require the occupant to contribute to the down payment and it does not require that the occupant be on the title or deed of trust.
Rhonda,
Thank you for that input. However, the Non-Occ option (Freddie Mac specialty) allows for the downpayment to be from the non-occupant (full gift). The occupant does not need to contribute the downpayment. This at least is what Oda Egeland from Interfirst (now CITI) was advising me on about 2 months ago…she’s a very good account exec.
In regards to the occupant being on title or the deed, I’m don’t know enough to comment here…..
Ok, this hurts. I’m wrong. Interfirst apparently changed their guidelines.
“Non-Occupying Co-Borrowers are allowable up to 95% LTV; with Accept Risk Classification from Loan Prospector or Approve/Eligible from Desktop Underwriter. The occupying borrower MUST have 5% of their own funds invested into the transaction FOR ANY LTV OVER 80%.”
Excuse me while I go eat humble pie. Thank you Rhonda for that info.
Trust me, David. This is two different programs. I just closed a purchase with a non-occ and my borrower (the occ.) had to invest 5% last week–Flagstar.
Not being vested or on the deed is a huge difference in itself. Maybe the borrower does not want the parent or child to be in title for estate or other financial planning reasons. If the borrower were to purchase a property for family and not have the parent or child they are buying the property for on title (w/o this program) it would most likely be considered NOO.
Oopps! Just goes to show you how much our guidelines are always changing. 🙂 No problem, David. You made me double check my guidelines too and there’s nothing wrong with that!
Is this a Fannie/Freddie program? What banks carry it? Is it a manual or automated Underwrite?
Thanks!
David, check out Mr Snappy on comment 13.
Thanx Rhonda for keeping us in the “loop” (as they say!) LOL!
Hi, is this type of loan still available now? Do you know whether they have it in Texas too? Thanks
Hi Mi,
I know the program was still available a week or so ago in Washington State. I only originate mortgages for homes located in Washington so I have no idea if it’s available in Texas. Sometimes guidelines may vary from state to state.