- FHA has a loan program that the financial industry has lovingly labeled: The “Kiddie-Condo” Loan (although, they are not limited to the purchase of a condominium … it can be a standard single-family home, duplex, etc.)
- Essentially, here are the highlights:
- The maximum FHA loan for Sandoval, Bernalillo, and Valencia Counties for a single family dwelling is $271,050.00. (Higher loan amounts are available for 2, 3, and 4 unit dwellings.)
- The min. down payment on 1 unit dwellings is approximately 3.50% of the purchase price. (You may be able to qualify & the funds are available, for the MFA program which includes 3.0% grant money in combination with this FHA loan, your actual down payment could be .50%.
- Parents can purchase the home and place their son or daughter in it. (The reverse can happen too. Let’s say the children have some elderly parents with a fixed income, they … the children … can qualify for the home … adding whatever income and debt that the parents have … and qualify based upon the combination thereof.)
- They all will be on title for FHA purposes. Different for FHA/MFA.
- Qualifying is based on the strength of the buyers’ and parents’ credit scores, debt to income ratios, etc.
- New: The child is not required to have taxable income, however, credit must be acceptable with at least 1 credit score. If the child is a student with no income, non traditional credit is NOT allowed. FHA will no longer allow alternative sources of credit for borrower’s who have no credit or taxable income at all.
- Borrower’s must have 2 months cash reserves for total PITI monthly payment of their own funds. No gift of reserves is allowed.
- This program is used many times by families who choose, while their child goes to college, to have them in a house … rather than in a dorm. Sometimes the program is used to help a young family get a head-start.
- During that time, everyone in the family is benefiting from home ownership and the appreciation associated with it, while not wasting money for housing for the student (if applicable).
- The child also benefits, as he or she is establishing a credit rating of their own.
- The parent benefits in as much as the normal down payment on “investment” property can be as much as 30% and the interest rate would be higher as well. This would be considered “owner-occupied” as the son or daughter is living in the home.
Please call Rachel for the details. Rules and guidelines are subject to change at all times. Be sure to follow-up with Rachel Donovan with Legacy Loan Officer for any updates.
***Rachel Donovan
Legacy Mortage
License # 368845
505-328-4792
rdonovan@legacymortgagenm.com
http://legacymortgagenm.com/RDonovan/
