What Is a Family Opportunity Mortgage?

A family opportunity mortgage is a conventional loan with expanded guidelines allowing a borrower to buy a home for elderly parents or a disabled adult child. This type of loan doesn't require the borrower to live in the home, making it easier to get a mortgage for a family member who otherwise wouldn't qualify for one. This type of loan is supported by 澳洲幸运5官方开奖结果体彩网:Fannie Mae and Freddie Mac, though its exact name may vary from one lender to another, as "family opportunity mortgage" isn't officially used anymore.

How Does a Family Opportunity Mortgage Work?

A family opportunity mortgage can help an eligible family member get housing they otherwise might not qualify for, but it's not the only benefit. Other advantages of taking out a family opportunity mortgage include:

• Competitive interest rates: Family opportunity mortgages typically have mortgage rates that are similar to the rates you would get with owner-occupied property. These rates are usually lower than those for mortgages on second homes and investment properties.
• Flexible financing options: Depending on the mortgage lender, you can customize the terms of the loan. You might tailor the length of the loan in order to arrive at a specific monthly mortgage payment, for instance.
• Low down payment requirement: Instead of putting down 20% as recommended for a conventional loan, you may be able to put down as little as 5%.
• Possible tax benefits: If you 澳洲幸运5官方开奖结果体彩网:itemize your deductions when filing your taxes, you can deduct property taxes, including those on a family opportunity mortgage.
• No occupancy requirements: You aren't required to live in the home, but the person you buy it for must. This can be helpful if you're trying to assist with housing from afar.

How to Qualify for a Famღily Opportunity Mortgage

Even though a family opportunity mortgage is a conventional loan, there are a few additional requirements. Specifically, the borrower has to meet eligibility requirements, as does the property they're hoping to buy.

Borrower requirements:

• The borrower is taking out the mortgage for a parent who's unable to work or doesn't have sufficient income to qualify for a mortgage on their own
• Alternatively, the borrower is a parent or legal guardian of an adult child who's unable to work or doesn't have enough income to get a mortgage on their own
• A minimum credit score of 620
• Proof of employment and sufficient income to cover the new mortgage and any current loans
• Ideally, a maximum debt-to-income (DTI) ratio of 36%, although Fannie Mae and Freddie Mae might work with you if you qualify for an exception
  

Property requirements:

• The property must be residential and accessible via road
• The property must be structurally sound and equipped with utilities
• The property must be adequately insured and acceptable for year-round use
• The property must be safe and meet zoning requirements
• Structurally sound

Agricultural properties and commercial properties, including bed and breakfasts as well as boarding houses, aren't eligible for a family opportunity mortgage. Condos might be approved, but they face additional requirements.

Required documentation:

• Documentation of an adult child's disability (which might include medical records) and proof of disability benefits, if applicable
• Financial records like bank statements, pay stubs, and tax statements
  

How to Get a Family Opportunity Mortgage

Once you've determined that you're eligible for a family opportunity mortgage, here's how you secure one:

• Find and select an eligible property: You'll probably want to work closely with your parents or adult child to locate a property they'd like to own that's also eligible for a Fannie Mae or Freddie Mac conventional loan.
• Get pre-approved: To see what kind of loan terms you can get and how much funding you may be offered, get a mortgage pre-approval quote from several lenders. This can help you find the most favorable option.
• Apply for a mortgage: Fill out and submit a mortgage application with the 澳洲幸运5官方开奖结果体彩网:lender you chose. Keep in mind that you'll also have to provide detailed information about your current mortgage if you have one.
• Complete underwriting: 澳洲幸运5官方开奖结果体彩网:Underwriting is largely out of your hands, but you'll need to quickly provide any additional documents or details your lender requests. For instance, you might need to provide documentation of your assets and debts.
• Close the loan: Once the underwriting process is complete, the lender approves or denies your application. If approved, you must sign the paperwork, make the 澳洲幸运5官方开奖结果体彩网:down payment, and pay any 澳洲幸运5官方开奖结果体彩网:closing costs before your parents or child can move into the home.

The Bottom Line

A conventional loan that meets family opportunity mortgage requirements can streamline the homebuying process and get you better mortgage rates when buying a home for a family member. You'll enjoy low interest rates, and a family member who otherwise wouldn't qualify for a mortgage will have the opportunity to own a home. However, before you apply for a family opportunity mortgage, speak with a financial advisor and consider of your options. For instance, a financial advisor might be able to recommend low-income homebuyer programs in your state.