Clients and Friends,
As the new school year approaches, many families with college-bound students are considering how to best support their student’s financial future. If you have older children heading to college, now might be the perfect time to explore a unique opportunity: helping your student create wealth through home ownership. Rather than renting, your student could live in a home they own, offering a more accessible and affordable path to home ownership.
Here’s how this strategy works: The student (18+ years old) becomes the primary occupant and co-borrower on a mortgage alongside one or both parents, or another family member (e.g. grandparent, etc.). This approach allows the child to have ownership in the property while benefiting from a lower interest rate and down payment, utilizing the combined income of all borrowers for qualification. While you may have heard this strategy referred to as “Kiddie Condo”, the home DOES NOT have to be a condo!
Key Advantages:
Affordability: With down payments as low as 3.5% or 5%, and lower interest rates compared to investment properties, this strategy makes home ownership more attainable.
Flexible Loan Options: Both FHA and Conventional loans support this strategy.
Shared Ownership Rights: All individuals on the loan share equal ownership of the property, are liable for loan payments, and have the option to sell the property to recoup their investment.
Investment Potential: In the shorter term, other rooms in the home can be rented out, helping to cover a portion of the mortgage costs (note: roommates are not liable on the loan, and their income is not included for mortgage qualification). Additionally, over time, the home can appreciate in value, potentially offering a profitable investment when sold or converted into a rental after graduation.
Credit Building: By helping your student purchase a home, you're also aiding in building their credit, as on-time mortgage payments contribute positively to their credit history.
Expert Hack: The college-age child DOES NOT have to be attending higher education for this strategy to work!
This is a powerful mortgage strategy, but it may not be suitable for everyone. If you are interested in learning more about this option, please reach out to one of our trusted loan consultants below. We’re here to help you navigate the process effectively and set up a winning strategy tailored to your specific goals.
