The Family Opportunity Mortgage is perhaps the best option for borrowers looking to purchase a home for a family member,
While it’s limited to purchasing homes for elderly parents, disabled children, and college students, this program allows you to enjoy, essentially, the same benefits of a Fannie-Mae supported loan. Namely, lower interest and downpayment requirements.
Other loans, most of the time, can’t bring the same benefits.
Here are seven situations where a Family Opportunity Mortgage could be the right choice for your unique purchase…
7 Scenarios for the Family Opportunity Mortgage
1. When a Disabled Adult Child Need Support with Housing
Many disabled individuals are fully capable of generating an income that allows them qualify for a mortgage. But others may struggle with income, which is where the Family Opportunity Mortgage can help.
This loan program allows you to purchase a property for a disabled adult child who does not have sufficient income to qualify on their own. To use the program in this situation, you need to demonstrate their income (or lack thereof) through tax documents, paystubs, bank statements, and other financial reports. You’ll also need to demonstrate the person’s permanent disability.
In this case, you (the parent) will qualify for the loan while the disabled adult lives in the property.
2. When an Elderly, Fixed-Income Adult Can’t Qualify on Their Own
This is perhaps the most common use for the Family Opportunity Mortgage. If you have elderly parents living on a fixed and limited income, this program can essentially use your income, credit, and financial situation to provide the comfortable, livable home they deserve.
Again, you’ll have to demonstrate their income and show that they are unable to afford a mortgage on their own. You will be the one qualifying for the loan, but it may be possible to use some or all of the parent’s income for qualification.
3. When Your College Kid Needs an Affordable Place to Live
College is expensive. According to U.S. News and World Report, the cost of public in-state schools for a single year is $10,338. Assuming a four-year degree, you’re looking at over $41,000.
Many college students struggle to afford this tuition while also purchasing books and dealing with the higher cost of living that often comes from vibrant college towns. And then there’s the cost of housing.
If you have a child about to enter college, and you don’t want them to have the high costs of renting a property in a college town, the Family Opportunity Mortgage can help. With this program, you can get an affordable, accessible loan while purchasing a property that allows your child to live in comfort. You’ll have to show that the child is enrolled in college, so enlisting the help of an experienced professional can be useful, as the qualification process is a little more complicated.
4. When You Need to to Purchase a Loved One’s Home, Without a High Downpayment
The downpayment is, for many borrowers, the biggest barrier to purchasing a property. This goes for primary residences, second homes, and investment properties.
With the Family Opportunity Mortgage, you enjoy the same benefits as a conventional, Fannie-Mae supported loan on a single-family primary-residence home. This can mean a much lower downpayment. For a second home, the downpayment requirement is often 10% or higher; with an investment loan, you may need to bring as much as 15%. But with the Family Opportunity Mortgage, you can likely qualify with as little as 5%.
5. When You Want to Limit Your Mortgage Interest Rates
Whether you are purchasing for a disabled child, an elderly parent, or your college-bound student, you always want to have the lowest interest rate possible. While there is no locked-in rate for all Family Opportunity Mortgages, these loans tend to have a lower interest rate than other products.
Basically, interest is a counter-balance to risk. If perceived risk is high, lenders increase interest. But when you are purchasing a home for a loved one, you are more likely to protect that purchase and ensure it doesn’t go into financial hardship or default. It seems reasonable to assume that most owner’s won’t let their parent’s home go into foreclosure. Therefore, they can reward borrowers with lower interest rates compared to loans for second homes or investment properties.
6. When You Need to Provide a Home But You Cannot Live in the House
There are a variety of loans that will allow you to meet the basic needs of an adult child or elderly parent, even your college student. But with many of these loans, you have to live in the property. Some loans for second homes, for example, require that you live in the property at least some portion of the year.
Clearly this is not always possible for numerous borrowers.
With the Family Opportunity Mortgage, you don’t have to be an “occupant.” You don’t have to live in the property, which makes purchasing a home for your loved one far more convenient.
7. When The Property is Close to Your Current Residence
Traditional loans for second homes often come with a distance requirement. The second property cannot be within a certain radius of your primary home. Usually this radius is 50 to 100 miles; the second home cannot be inside this radius.
The Family Opportunity Mortgage eliminates this requirement. This is clearly a benefit, especially for elderly adults and disabled children who may need care and support from family members.
Let Us Help With Your Family Opportunity Mortgage
While it brings numerous benefits, qualifying for a Family Opportunity Mortgage can be complicated. There are unique requirements, such as documenting an adult child’s disability or showing that a student is enrolled in college.
Because of the complexities, it helps to work with an experienced mortgage professional. Contact our staff today and tell us about your homebuying goals. We’ll work with you to find the right mortgage for your unique needs.