The FHA has a wonderful program for parents of children going off to college. Faced with housing expense in addition to tuition, parents sometimes seek alternatives. Unfortunately, they often miss one of the best options out there: The FHA Kiddie Condo loan program.
The program allows the parent and child to own a suitable home in the college town together. The parent’s income and credit are used for qualifying purposes and though they won’t be occupying the property, they can still buy it with as little as 3% down. The co-signing child occupies the property and can even rent out additional bedrooms to other students, offsetting the monthly payment. And, by the way, despite the name, the property doesn’t have to be a condo. Single family homes are fine, too.
At the end of a four year (or more) college stay, the property can be sold; and often it will have appreciated to the point of turning a nice profit for the owners, potentially offsetting some of the other expenses of college or providing a down payment for the graduate’s next home.
FHA maximum loan amounts vary by location and that must be considered when looking at this type of program. For example, in Guilford County, the maximum FHA loan is $271,050. A student attending UNCG could most certainly find suitable housing for that. But a student attending, say, Northwestern University, near Chicago, would have a maximum loan limit of $365,700.
Now here comes the interesting twist: the program also works at the other end of the spectrum. If you have elderly parents living on a fixed income, you may use this program to co-purchase a home for them. Again, you’d have to qualify for the property and you’d both be on the deed. By taking title to the property as Joint Tenants, you allow for the property to pass to surviving owners upon the death of others, outside of probate. That could be a very nice benefit!
The difficult part of this program is finding a lender who understands it and knows how to get this kind of mortgage approved. Thankfully, we have several lenders with whom we work who can guide you through the process, so give us a call if this sounds like a program you could use!
GreatNest and The Vincent Group is a full service real estate company charging a low set fee instead of a percentage commission. We serve buyers and sellers in Greensboro, High Point, Winston-Salem , Summerfield, Oak Ridge, Jamestown and surrounding areas. You can reach us at (336) 790-5210 or by emailing Steve Vincent. Visit our website: greatnest.com.