Sometimes elderly parents need help purchasing a home. If your parents don’t generate enough income to qualify for a mortgage loan, you might be able to take advantage of the Family Opportunity Mortgage to help them get into a home.
What Is the Family Opportunity Mortgage?
This mortgage program is a little-known one, even though it can be a smart, cost-effective option in certain situations. When a person is buying a home for their elderly parents, Fannie Mae offers this loan program. Unlike other programs, this loan allows them to purchase a property as an owner-occupied residence, even though they won’t be living there.
What Are the Benefits of a Family Opportunity Mortgage?
When you purchase an owner-occupied residence, you receive better interest rates than if you’re buying a rental property or a second home. Other benefits of this home loan are:
- You don’t need to be a certain distance away from the residence. Second homes typically need to be 50 miles or more away from your residence. This distance would be inconvenient if you’re frequently seeing and caring for elderly parents. With the Family Opportunity Mortgage, there are no distance requirements.
- There are no large down payment requirements. Most loan programs require 20-30% down for properties you are going to rent out or not going to live in full time. The Family Opportunity Mortgage program only requires as little as 5% down. This can make homeownership for elderly parents financially possible in a way that no other solution could provide.
- The parents don’t have to be on the loan. It is NOT required for either parent’s name to be on the mortgage, which is beneficial if they have bad credit or a high debt load.
What Are the Requirements?
A borrower taking advantage of this program needs to prove the elderly people who will be living in the home are, indeed, their parents. They will also need to provide the parents’ pay stubs and social security award letter to prove they don’t make enough income to qualify for a loan on their own. The borrower needs to have a 620 or above credit score and steady employment. A debt-to-income ratio of 45% or below is also required.
How Do I Start?
Taking advantage of the Family Opportunity Mortgage to help elderly parents attain a home starts with your lender. They can talk to you about your family’s needs, look at your finances and your credit score, and outline your available options.
It can be stressful trying to resolve an unstable housing situation for aging parents. A Family Opportunity Mortgage can eliminate that stress, allowing people can get their parents into a house with fewer upfront costs and a smaller monthly mortgage payment.
