Parents whose children will be moving to attend school might want to consider the Federal Housing Administration (FHA) Kiddie Condo program.
In a nutshell, this program allows parents to buy a home that their child can live in and also collect rent from their child’s roommates.
The program is a Housing and Urban Development (HUD) program administered by the FHA. Students and their parents can purchase a home together as a primary residence.
Keep in mind that if this were to happen in a program other than the Kiddie Condo program, the property would be considered an investment property. Thus, it would involve much larger down payments and the interest rate would be much higher.
Many students have little or no income or assets to bring to the table. This is where the parents come in. The benefit to the student is that he or she can have a mortgage payment history by the time he or she graduates from college.
When qualifying for this program, keep in mind that the student by himself or herself may be unable to qualify from an income perspective.
He or she will have to demonstrate some type of minimal positive credit history. At a minimum, he or she needs to have no adverse items such as late cell phone or credit card payments and a student’s credit score must be high enough to qualify on his or her own.
Ask your mortgage professional for more details about this program.