“Kiddie” Loans are not Just for Kids!

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 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 Honolulu County, the maximum FHA loan is $721,050.  A student attending the University of Hawaii could certainly find suitable housing for that.  But a student attending, say, Oregon State in Corvallis, Oregon would have a maximum loan limit of $299,000.  Quite a difference! But remember, the median home price in Corvallis is about $288,000, so that maximum is workable.

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!

Help-U-Sell Honolulu Properties is a full service real estate company that provides exceptional service while charging less than ordinary Realtors.  We’ve been successfully helping buyers and sellers all over Oahu for more than 12 years and we’d be delighted to help you achieve your housing dreams.  Contact us at (808) 593-8811, or visit our website.