Buying your first home is a big commitment and mortgages can be extremely expensive. However if you are a first time homebuyer there is a loan option that is specifically designed for young adults purchasing their first homes. This loan is designed to provide a way for parents to help their young adults into a home. These loans have a lot of benefits and could save you money if you qualify.
The Kiddie Condo Loan
When your young adult is ready to purchase a home there are options that can allow parents help them manage a mortgage. In this type of loan both the parent and child apply for the loan, which significantly increases the chances of loan approval. Under a Kidder Condo Loan the parent will help the child pay the mortgage payments with extra income and credit that helped get the loan approved. This makes it possible for a young adult qualify for a purchase that they would not have been able to make otherwise.
This loan program provides insurance for both the lender and borrowers. The lenders have the the insurance that many incomes will be able to help pay the loan and keep the borrower in good standing with the loan. The borrowers will be able to take advantage of a very low down payment of around 3% of the home value. This is a huge drop in comparison to most conventional loans which can range up to 20% down. There are also very low competitive interest rates on Kiddie Condo Loans. Other lenders will would require a high interest rate because the parents will not live on the property, however with this program you can qualify for a owner-occupied interest rate. These interest rates have the capacity to save you lots of money on monthly payments towards your mortgage. This programs also allows for the homeowner to establish good credit with the protection and coverage from their parents. This works because the credit of the parents is what helps the loan approval process, but the home owing, and mortgage payments will help the credit of both the parent and child. However, this is only if payments are made on time and in full to stay on good standing.
These loans have some major benefits for the for the parents as well. As with any mortgage you can deduct the amount of interest and points that you will pay from your taxable income. You have the flexibility to split this tax deduction between the borrowers as your see fit.
The qualifications and requirements for a FHA Kiddie Condo Loan are not extensive. One of the borrowers is required to live on the property as their primary residence. Also there are a requirement of two parties lending on this type of loan. Also, don’t let the name fool you, the property does not have to be a condo, single-family to homes are included in this FHA program.