Now that the school year is over, it might be time to think about where your children are going to live when they go to college. The Federal Housing Administration (FHA) has a great program that will fit this bill perfectly.
It is called the Kiddie Condo loan program, and it allows parents and their children to be on a mortgage together.
To qualify, the student must be at least 18 years of age so he or she can sign the real estate contract and mortgage application with the parent(s).
There is a minimum of 3.5% down, as with a traditional FHA mortgage. Minimum credit scores vary by lender but will probably be in the range of 640 for both parent and student, and neither can have big items like recent bankruptcies, foreclosures or late payments on their records.
The student can have minimal credit, but what he or she does have must be fairly clean, as in no recent late payments for such things as cars, credit cards or cell phones.
If the student has income, so much the better, but he or she will need to be able to prove that the income will continue while he or she is in school.
If the student does have income he or she can use, both the student and parent together need to be able to qualify for both the property the parent currently owns, if there is any, plus the new one.
To follow this scenario through to an exit strategy, both parties will be on the mortgage until the property is either sold or the student refinances the parent off it.