This entry was posted on Friday, July 20th, 2007 at 2:50 pm and is filed under Mortgage Programs, Qualifying. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Family Opportunity Mortgage program
Through the years, I have helped many parents purchase homes or condo’s for college bound children. Because of the high demand for housing around college campuses, this has often proven to be a great investment.
Last year, my son lived in an 8 bedroom house near San Diego State University where he attended school and played soccer. Rent was $700 per bedroom! Do the math. That’s $5600 per month in rent! How’s that for positive cash flow while you wait for values to rise. I’ve seen appreciation cover the entire cost of the education.
Until now, however, parents have had to accept higher interest rates. That’s because very few kids have the job history or established credit needed to be an occupant borrower. Even when parents co-borrow, we’ve had to contend with stand-along (debt) ratios.
Now with the new Family Opportunity Mortgage, it’s easy. Parents can buy a home for a college bound child, disabled child, or even an elderly parent who lacks sufficient income of their own. And they can get the best available owner occupied rates! Single family homes, condo’s and PUDs are all fine, and you can even do 2–1 buydowns. Nice.
Got a question or comment? Leave it below and I’ll get it answered for you.
August 12th, 2007 at 8:18 am
Are you kidding? I’ve been doing these kinds of deals for my clients for years. You just call it a 2nd home, have the parents buy it, and move the kids in. What the big deal?
August 12th, 2007 at 8:34 am
James,
The big deal is that you are committing “occupancy fraud” when you do it this way. That is one of the forms of mortgage fraud, and it exposes you, your clients, and your broker to potential liability.
Increasingly, lenders are sending someone out to the home after the loan closes to see who’s actually living in it. It better be the person you indicated on the loan application, or that loan may be called due.
Why not just do it right in the first place?
August 9th, 2009 at 3:13 am
Can this work the opposite way? The son buying their homeless parents a home? I’m active duty military and single, stationed overseas, therefore, technically I don’t qualify for any conventional loans or VA loans because of the so called “buyer has to occupy the home policy,” even though I’ve been serving for over 8 years now and technically my primary residency differs every time I get stationed somewhere. If this program can work for me, is the loan treated like a conventional loan? Or what’s my best bet? Appreciate any advice.
August 10th, 2009 at 7:55 am
Rob,
that’s an interesting question, and one I haven’t asked. However, I’ve used the program for kids to buy their parents a home, and I the key is whether you can qualify for your own rent or mortgage and theirs as well. If that’s the case, I don’t see why it wouldn’t work. Technically, it has nothing to do with your proximity to the home or you living in it. It’s not a VA program, so you would need a downpayment. But if you can must that, it just might do the trick.
September 3rd, 2009 at 3:12 pm
I have a disabled son living in my rental two family. I do not live in the house. I live two miles away. Can I refinance with the better rate without putting his name on the deed or mortgage? Who actually owns the house if we refinance?
Jack
June 8th, 2010 at 3:10 pm
Is the Family Opportunity Mortgage Program still available? Do you know if any lenders in Montana use it?
June 8th, 2010 at 3:51 pm
Hi Doris,
I don’t know if the program is available in Montana, however it is a standard Fannie Mae guideline that most of the banks now acknowledge. They may not all recognized it by that name (I think that is what Chase called it a few years back), but it’s in the guidelines. Also, I have noticed that banks have limited it to disable children or parents. Recently I have been turned down on disabled “grandchildren”, and college-bound children. In one case, I was asked to prove that the parents (for whom the property was being purchased) could not qualify on their own. Still, it’s a good deal.