FHA Loans allow a parent to assist in the qualifying process for their kids who are preparing to buy their new home.
The process is called a non-occupying co-borrower. Non-occupying co-borrower programs allow some of the debt to be attributed to the parent’s income thus allowing a lesser amount of the debt to assigned to the new home buyer. Each party must be creditworthy and debt to income ratios must be in line with specifications laid out by FHA guidelines.
FHA Loans also allow gifted down payment funds from parents or other family members too! FHA down payment requirements are at only 3.5%, and that 3.5% can be gifted by a parent or family member, so one could literally get into a new home at market rate for none of their own out of pocket expense at all.
I hear all of the time how some people still think they need 20% down payment in order to buy a home. That is just not true. I tell everyone who will listen to me, with interest rates as low as they are, don’t use your own money that you have been saving up for years. Hold on to that money, invest it, save it for a rainy day. The fact that you have good credit rewards you with the program that allows you to get into that perfect home with as little out of pocket expense as necessary. Use someone else’s money for that purchase. Use the mortgage bank’s money. You would be shocked by the relatively small dollar amount you save in each month’s payment between putting a substantial down payment of 20%, versus the minimum down payment of 3.5%.
There is no better time to explore these programs and payment comparisons. Don’t be left watching the market run away from you. Take a closer look at your options for home ownership.
I think that you will be pleasantly surprised.
