Getting Your Parent(s) into a Home – Little Known Home Buying Options
Many times, an elderly parent or adult child with a disability needs your credit and loan worthiness, and partial or full financial support to get them into a home.
I recently worked with a client who was purchasing a home for an elderly parent. During this process, we were introduced to a Fannie Mae program called the “Family Opportunity Mortgage” that allowed my client to purchase this home using owner-occupied rates and guidelines even though only the parent would be living there.
Normally, this purchase is classified as a “second home” or “investment property” and requires a larger down payment and higher interest rates that a primary residence. But the Fannie Mae program allows for this type of purchase to be classified as an “owner occupied” residence, and gets the purchaser out of this higher risk/cost loan classification.
Here is the exact wording from the Fannie Mae website for “Children wanting to provide housing for parents”:
“If the parent is unable to work or does not have sufficient income to qualify for a mortgage on his or her own, the child is considered the owner/occupant.”
Now when loans products are quoted, you get the current best rates and lowest down payment options because this “second home” for you, and “primary residence” for your parent, qualifies for ”Principal Residence Property” rates under Fannie Mae.
Another HUGE benefit is that this program eliminates the specific a rule for second homes, specifically the requirement for the property to be at least 50 miles away from your primary residence. Many people who are purchasing a home for an elderly parent or child with disability are doing so to have them live nearby. This program makes it possible.
You have the option of having the parent on the loan or keeping them off the loan. If they are on the loan, it may hurt your qualifications if they have debt and limited or no income. It will all be counted.
Not all lenders work with this Fannie Mae program. So be sure and inquire up front if you are looking to get your parent into a home with the benefits of this loan program.
Amy & David Brossette
Disclaimer – I am not a mortgage professional. I am sharing my experiences and you will need to verify all the current laws and programs with your mortgage professional.