Rental Homes

• FHA has a loan program that the financial industry has lovingly labeled: The “Kiddie-Condo” Loan (although, they are not limited to the purchase of a condominium … it can be a standard single-family home, duplex, etc.)
• Essentially, here are the highlights:
  1. The maximum FHA loan for Sandoval, Bernalillo, and Valencia Counties for a single family dwelling is $271,050.00. (Higher loan amounts are available for 2, 3, and 4 unit dwellings.)
  2. The min. down payment on 1 unit dwellings is approximately 3.50% of the purchase price. (You may be able to qualify & the funds are available, for the MFA program which includes 3.0% grant money in combination with this FHA loan, your actual down payment could be .50%.
  3. Parents can purchase the home and place their son or daughter in it. (The reverse can happen too. Let’s say the children have some elderly parents with a fixed income, they … the children … can qualify for the home … adding whatever income and debt that the parents have … and qualify based upon the combination thereof.)
  4. They all will be on title for FHA purposes. Different for FHA/MFA.
  5. Qualifying is based on the strength of the buyers’ and parents’ credit scores, debt to income ratios, etc.
  6. New:  The child is not required to have taxable income, however, credit must be acceptable with at least 1 credit score.  If the child is a student with no income, non traditional credit is NOT allowed.   FHA will no longer allow alternative sources of credit for borrower’s who have no credit or taxable income at all.
  7. Borrower’s must have 2 months cash reserves for total PITI monthly payment of their own funds.  No gift of reserves is allowed.
  8. This program is used many times by families who choose, while their child goes to college, to have them in a house … rather than in a dorm. Sometimes the program is used to help a young family get a head-start.
  9. During that time, everyone in the family is benefiting from home ownership and the appreciation associated with it, while not wasting money for housing for the student (if applicable).
  10. The child also benefits, as he or she is establishing a credit rating of their own.
  11. The parent benefits in as much as the normal down payment on “investment” property can be as much as 30% and the interest rate would be higher as well. This would be considered “owner-occupied” as the son or daughter is living in the home.

Please call Rachel for the details. Rules and guidelines are subject to change at all times. Be sure to follow-up with Rachel Donovan with Legacy Loan Officer for any updates.

***Rachel Donovan
Legacy Mortage
License # 368845
505-328-4792
rdonovan@legacymortgagenm.com