Buying a Home For Mom, Dad or Child Using the Family Opportunity Mortgage

Is the Family Opportunity Mortgage Right for You?

The Family Opportunity Mortgage is a specialized loan program designed to assist families in overcoming financial barriers when purchasing homes for their disabled adult children or elderly parents who cannot afford a residence on their own. This program offers unique features such as low down payments and eligibility for non-occupying borrowers, meaning the person taking out the mortgage does not have to live in the home.

 

Who Can Benefit from the Family Opportunity Mortgage?

The Family Opportunity Mortgage is specifically designed to help families with disabled adult children or elderly parents who face significant challenges in securing a home on their own.

Parents Helping Disabled Adult Children
For disabled adult children, the obstacles to homeownership can include limited income from disability benefits, which often fall short of mortgage qualification requirements. Plus, they may lack the credit history or employment stability needed to secure a traditional mortgage. The Family Opportunity Mortgage allows parents to step in, purchasing a home on behalf of their disabled adult children without being required to live in the property themselves.

Adults Helping Elderly Parents
Elderly individuals often struggle to make ends meet with fixed incomes from pensions or social security, making it difficult for them to afford a new home. Health issues or mobility limitations might necessitate moving to a more accessible or supportive living environment. Adult children can use the Family Opportunity Mortgage to purchase a suitable home for their aging parents, ensuring they live in a safe, comfortable, and independent setting. By alleviating the financial burdens typically associated with homeownership, this mortgage program provides an alternative marked by attractive benefits like low down payments and favorable loan terms.

 

Key Advantages of the Family Opportunity Mortgage

Low Down Payment
Low down payments are like music to homebuyers’ ears these days. The Family Opportunity Mortgage offers generally low down payments which are less than the 20% or more that many borrowers who qualify to purchase a second home are required to put down, making the purchase process much more feasible.

Flexible Occupancy
While traditional mortgages require the borrower to live in the home they are purchasing as their primary residence, the Family Opportunity Mortgage is more lenient. The qualifying family member is able to occupy the home as their primary residence, but the borrower is not required to live there.

Property Homestead Exemption
Under the homestead exemption, the primary residence of a homeowner is eligible for a reduction in the home’s assessed value, leading to lower property taxes. When parents or adult children purchase a home through this program, the property can often qualify for the homestead exemption, even if the borrower does not live there. This tax benefit helps reduce the overall cost of owning two homes, so the financial burden isn’t so colossal.

 

The Family Opportunity Mortgage in Action

If you’re still a little gray on how the Family Opportunity Mortgage program works and who it is meant for, here are a couple of “for instance” scenarios to paint a clearer picture.

Consider the Smith family, whose son, Jake, is a 30-year-old with a physical disability that limits his ability to work full-time. Jake lives with his parents, but they want to provide him with more independence by helping him move into his own home. Given Jake’s limited income from the confines of his disability benefits, he cannot qualify for a mortgage on his own. However, using the Family Opportunity program, Mr. and Mrs. Smith can purchase a home for Jake without needing to take up primary residence there themselves.

On the other side of the coin, there’s the hypothetical Johnson family, where Sarah and her husband, Mark, are concerned about the living situation of Sarah’s elderly parents, who are struggling to maintain their large, aging house. With their limited fixed income from Social Security and pensions, Sarah’s parents cannot afford to move to a more suitable home. Using the Family Opportunity program, Sarah and Mark decide to purchase a smaller home better tailored to her parent’s needs.

 

Taking the Next Step with a Family Opportunity Mortgage

Finding a Family Opportunity Mortgage Lender
Are you looking to provide a safe and comfortable home for your disabled adult children or elderly parents? Lean on our Loan Officers to walk you through how the Family Opportunity Mortgage can help you secure the ideal living environment for your loved ones.

Pre-Qualification Process
To qualify for the Family Opportunity Mortgage, borrowers (not the loved one they are purchasing the home for) must meet the same requirements for conventional loans, along with a couple of additional parameters including:

  • 620 minimum credit score
  • 50% maximum debt-to-income ratio
  • Proof of employment and proof of the ability to afford the costs of a new mortgage in addition to any existing housing costs
  • A letter of explanation that the family member cannot afford the home on their own

What Happens Next
If the loved one you’ve purchased the home for passes away, you will still own the home, and you can decide whether to assume the responsibility of ownership or you can sell the home as you would any other property investment.

 

FAQs

Who offers the Family Opportunity Mortgage?
The Family Opportunity Mortgage is offered by two major government-sponsored enterprises, Freddie Mac and Fannie Mae. These organizations play a crucial role in the U.S. housing finance system by purchasing and guaranteeing mortgages from lenders, which helps to ensure a steady supply of affordable mortgage credit. If you want to move forward with this unique loan, you can contact our licensed Loan Officers at Treadstone, who will help you navigate the process.

What are the income requirements for the borrower and the qualifying family member?
The borrower’s income needs to be sufficient to cover both their existing housing costs and the new mortgage payment. The qualifying family member’s income is not factored in at all. Instead, their ability to occupy the home as their primary residence is necessary.

Can I use the Family Opportunity Mortgage to buy a second home or investment property?
The Family Opportunity Mortgage is for primary residences only. The program is not the same as investment properties or second homes because the borrower is not intended to live in the home purchased in these scenarios.

This unique program is specifically designed to help families