You Don’t Have to Live with Your Parents to Buy them a House

Here to talk to you today about a little secret I learned a few years back that has helped several clients looking to buy a home for their parents. Hello everyone, this is Mia Schultz and I'm your mortgage therapist. Now in most cases, when you go to apply for a loan for a home that you're not going to be living in, this is going to have to be underwritten and looked at as an investment property.

Any of you out there who know anything about investment property financing, you know that your interest rates are going to be higher, your down payment requirement is going to be higher, and there may be some points involved to make the closing costs higher. This is not an ideal situation, especially for a child who is looking to help out a family member.

Well, there is a little secret guideline out there in the occupancy section of how the agencies look at primary residents occupancy. One of the things that Fannie Mae does tell us, and I'm going to read it to you here, is that if a 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.

Now this is a really cool guideline out there for occupancy because what this means is you, or your siblings, or whomever wants to apply for a mortgage can do so and have your parent live there as their primary residents. We would underwrite this as a primary residence. You can get in for the lowest down payment possible as a primary and get the lowest rates possible as a primary, even though you're not living in the house. This has turned out to be a great solution for several of my clients.

One of which, who I'm helping right now, do this exact same thing. She came to me and said, look, my mom has never had a home. She's getting older. We need to get her into a house nearer to me and my siblings and was expecting to have to come up with all this money and have these high costs. And we talked about the situation and they're going to be closing this month.

And the mom is ecstatic. They were able to come in with a much lower down payment, which obviously means less cash out of their pocket, to help support mom. And we're super grateful and excited to get her closer and to keep her in a house that she should be in where they feel that she's safe and secure as well.

So if you have this situation that you guys are contemplating, helping out a parent, please give me a call and we can discuss all of the different options on how we can put that together for you in the most economical structure possible. Thank you for listening.

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