FHA Kiddie Condo Loans

One of the misconceptions that the major media outlets are perpetuating right now is that there is a lack of money for mortgage loans. Every bank and mortgage loan officer that I speak to, says that they are receiving call every day from would be mortgage borrowers asking if any money is available to buy an home or refinance a loan. And every one of those loan officers wants to get the word out that mortgage money is not only available, they have rates lower than we have seen in my lifetime, and I'm heading away from 50!

Probably the best alternative for parents of college students who are thinking of buying a property for their student to live in during school, is the FHA "Kiddie Condo" loan. This loan is available to anyone with reasonable credit and is not income limited in any way. It comes with a minimum 3.5% down payment, although you can make a larger one if you wish. The Kiddie Condo loan gets the borrower an owner-occupied interest rate instead of an investor interest rate and requires that the student who will live in the condo or town home be on the deed to the property and on the loan. This is how the loan qualifies for an owner-occupied interest rate. The non-occupying co-borrowers, that's mom and dad or any other blood relative of the student, actually qualify for the mortgage. The loans can be your choice of either fixed rate 30 year, 15 years, or adjustable. There is FHA mortgage insurance on the loan, which is currently tax deductible, just like mortgage interest.

FHA Kiddie Condo loans do require that a condo be in an area where the development is FHA approved & the owner occupied ratio to all owners be above 50% but a town home does not have the same occupancy requirement.

With current FHA mortgage rates in the low 5% range for a 30 year fixed loan, there is no reason to buy into the media hype of catastrophe in the mortgage markets. But, it's still a good idea to do your homework before you sign on the dotted line, just to be sure you are getting a competitive rate and closing fees.