Family Opportunity Mortgage

What is a Family Opportunity Mortgage?

•  The Family Opportunity Mortgage is an excellent Fannie Mae/Freddie Mac conventional loan option for buying homes for family members. It’s designed to help Americans who have elderly parents or adult children with disabilities live in a safe environment.
• The Family Opportunity Mortgage loan program offers our clients to buy a house for their kids or parents using low down payment options with as little as 5% even though the person on the loan does not intend to occupy the property.
• Parents or legal guardian wanting to provide housing for their handicapped or disabled adult child. If the child is unable to work or does not have sufficient income to qualify for a mortgage on their own, the parent or legal guardian is considered the owner/occupant.
•  Children wanting to provide housing for parents. If the parent is unable to work or does not have sufficient income to qualify for a mortgage on their own, the child is considered the owner/occupant.

So, who exactly qualifies as “family?”

• The borrower must be a parent or legal guardian of the child living in the home or the child of an elderly parent living in the house; there are no exceptions to these rules.
• The co-borrower can be anyone (not necessarily related). Still, they must occupy at least one room in the house unless they are non-disabled and have another residence where they live.
• If either parent (or both) is living in a care facility, then any family member may apply for this mortgage program on their behalf as long as they intend to move into the new property upon closing on it; if neither parent lives with a spouse at that point, any other family member may apply as well.
• The child or elderly parent must occupy the home as their primary residence

Qualifying

• Acceptable credit scores are as low as 620 but higher credit scores will result in better rates and lower fees
• Borrower has to qualify with acceptable income and employment history
• The borrower will need to provide documents for their income as well as assets just like with any other loan. Pay stubs, W-2s, ID, Bank Statements and other forms may be required by the lender
• Debt to income ratio not to exceed 45% – this means all your monthly debts showing on the credit report divided by Gross (pretax) income cannot exceed 45%

Eligible Properties

• Fannie Mae does have some restrictions about the type of homes that can be purchased.
• The property may not be a timeshare or any type of investment home
• Single unit dwellings are the only homes allowed
• The intended borrower must be the main person in control of the home
• The home needs to be suitable for living year-round
• The owner of the property may not agree to allow a management firm to take over the control or occupancy of the home

Qualifications for Elderly Parents

• The elderly parents must either be in a situation where their income is not sufficient to qualify for a loan or they are unable to work
• The elderly parents must live in the home as their primary residence
• There is no requirement for where the home is located or the distance between the home of the elderly parent(s) and the home of the adult child
• The elderly parents are not allowed to be co-borrower on the loan. The adult child will be the borrower
• The adult child may own a primary residence in addition to applying for the home of their elderly parent and will have to qualify with Both housing payments

Could be Cheaper Than Assisted Living

• Some households are faced with the possibility of paying for assisted living out of pocket. This can be truly expensive and even inconvenient for many people. With these guidelines, it might be possible to purchase a home for your family member and still afford part-time health care for elderly parents for less than the price of a nursing home.
• Each situation is different, and your family will need to weigh the pros and cons of owning a second home versus using an assisted living facility to determine what is best for them.

Qualifications for Disabled Children

• These guidelines are also ideal for parents that wish to provide a home for their disabled, adult child. Many people that face life with disabilities hold jobs and contribute to society in meaningful ways. However, their level of income is typically low and does not afford them the chance to buy a home.
• Just like the situation mentioned above for elderly parents, the same rules apply to people that wish to buy a home for their grown, disabled child. The parents will be considered the primary borrower and owner of the property even though their child will be the main resident. This allows the disabled child to exert a form of independence and gives the family and parents peace of mind knowing that their child is living in a safe place nearby.
• The home needs to be for the child of the borrowers. They cannot be used on any type of investment or vacation home.

Summary

The Family Opportunity Mortgage allows family members to help each other buy or refinance homes. Borrowers who are considered non-occupant co-borrowers on loans must meet Fannie Mae’s usual borrower qualifications, including creditworthiness, income, and asset requirements.  You can contact us below and one of our knowledgeable loan officers from Unified Home Loans will reach out to you shortly!