The Family Opportunity Mortgage Program Explained

What is the Family Opportunity Mortgage Program?

The Family Opportunity Mortgage Program is a specialized mortgage program designed to help family members purchase a home for a loved one. The program was created to address the challenges faced by families who want to help their elderly or disabled relatives buy a home, but may not have the financial means to do so. Please note, this program is not limited to those who are elderly or disabled!

In Michigan, the Family Opportunity Mortgage allows a family member to use their income and credit history to qualify for a mortgage and purchase a home for their loved one. It can make it easier for elderly or disabled family members to achieve homeownership, and for younger family members to start building equity in a home of their own.

How can families use Fannie Mae’s program?

Here are a few simple common examples of how the Family Opportunity Mortgage Program can be used:

  • A family member purchases a home for an elderly or disabled parent. Borrowers may be able to buy a home with or for a parent who is a legal parent or guardian.
  • A parent purchases a home for an adult child. The parent can apply for a Family Opportunity Mortgage and use their own income and credit history to qualify for the loan, allowing their child to purchase a home they otherwise may not have been able to afford.

These are just a few examples of how the Family Opportunity Mortgage Program can be used to help provide support to loved ones. In any situation using this loan, the primary occupant must live in the home for at least one year, and must not be able to qualify for the home loan on their own.

 

Alternatives to the Family Opportunity Mortgage

While the Family Opportunity Mortgage can typically only be used for family members who are elderly or disabled, other options are available for a wider variety of scenarios!

Using a standard Conventional Loan, any person can invite another family member or individual to jointly purchase a home. Both borrowers must meet loan requirements and all persons listed on the mortgage share full responsibility and financial obligation of the home. It is not shared 50/50 between two parties — rather, both parties are equally responsible for the home in full.

While the minimum down payment for this scenario is 5%, only one of the borrowers is required to use the home as their primary residence. There are no location requirements.

Some scenarios where a joint Conventional Loan may be used:

  • A parent buys a home for/with their child who is a college student. The college student is also listed on the loan, and their finances are used in combination with the parents’ finances to qualify for the loan. These are commonly known as Kiddie Condos and can be purchased in any location.
  • A sibling purchases a home for their brother or sister, regardless of disability. The sibling may purchase a home as a primary residence for their brother or sister, as long as the person living in the home is included on the loan.
  • Multiple siblings pool resources & responsibility to provide a home for a parent, aunt or uncle, or grandparent. All people involved share financial obligation for the home and its upkeep. The property must be a primary residence for at least one person on the loan.
  • Unrelated friends chip in to purchase a home together. Conventional Loans do not require loan applicants to be related. Any person can buy a home with another person if they jointly qualify!

While this option is separate from the Family Opportunity Mortgage, a non-occupant Conventional Loan is a powerful tool!

Who is eligible for the Family Opportunity Mortgage Program?

The Family Opportunity Mortgage Program is designed to help families who want to support their loved ones in achieving homeownership. The good news is the Family Opportunity Mortgage Program is available to a wide range of family members. Parents can participate in this program to help their children purchase a home.

To qualify for the program, the family member providing the financial assistance must have a good credit history and meet the income requirements set by the loan program. The family member receiving the assistance must also meet the lender‘s standard underwriting criteria for a mortgage loan.

Fannie Mae’s Family Opportunity Mortgage guidelines include:

  • Minimum of 620 credit score
  • 5% down payment
  • Debt-to-income ratio less than 45%, can go up to 50% with certain compensating factors

Additionally, the residing family member must:

  • Not be able to qualify for the loan on their own
  • Live in the purchased home for at least one year

Requirements may change based on your circumstances! Get in touch with a licensed loan officer to see what you qualify for.

 

What are the benefits of the Family Opportunity Mortgage Program?

The Family Opportunity Mortgage Program offers several benefits for both the family member providing the financial assistance and relative living in the home.

  1. Loan requirements are similar to primary residence requirements, rather than an investment property or vacation home. This means a significantly lower down payment and interest rate in comparison to second home
  2. Provide a stable and secure living situation for loved ones: No need for the red tape with landlords or assisted living facilities. For many families, the primary benefit of the program is the ability to provide a stable and secure living situation for a loved one.
  3. Relaxed occupancy requirements. While the person receiving the housing benefit will need to live in the home for at least one year, the borrower offering assistance is not required to reside at the property.
  4. The program offers the opportunity to build equity in a home, which can be a valuable investment over time.
  5. Purchase without putting the family member’s finances at risk. The family member providing the assistance can use their income and credit history to qualify for the mortgage, which can be helpful if their loved one has a limited income or poor credit history.

Overall, the Family Opportunity Mortgage Program offers a unique opportunity for families to come together and support one another.

 

How do I apply for the Family Opportunity Mortgage Program?

If you’re interested in applying for the Family Opportunity Mortgage Program, our team at Treadstone is here to help you through every step of the process.

To start, get in touch with one of our mortgage experts to discuss your specific need. Treadstone Funding is a Family Opportunity Mortgage lender in Michigan, and we’ll guide you through the application process, eligibility requirements, and additional options!

The first step in the application process is to complete a mortgage application. We’ll ask you about things like income, assets, and credit history. If you are the family member providing financial assistance, you will need to provide additional documentation such as tax returns or bank statements.

As with any loan programs, all applicants are subject to underwriting approval, and loan terms may vary.

Connect with a Pro to see what you might qualify to borrow, and get one step closer to purchasing your next home.

 

Frequently Asked Questions

Can I buy my elderly parents a house?

Yes, using the Family Opportunity Mortgage program by Fannie Mae, Michigan families can support their elderly or disabled parents by purchasing a home for them. This real estate purchase allows your parents to avoid landlords and assisted living facilities.

Can family help pay a mortgage?

There are many options family to support other relatives, including providing housing and paying for a loan for the relative, when they cannot afford or qualify for a home loan on their own.

Who offers the Family Opportunity Mortgage?

In West Michigan, Treadstone Funding offers the Family Opportunity Mortgage as a loan option. It is one of the many programs and options available to Michigan home buyers.

Can parents help with mortgage?

Yes, under certain circumstances, parents can help with a mortgage. This can come in the form of combining finances for loan qualification, or gift funds to help with closing costs or down payments. Many options are available!

 

Subject to credit approval, not all borrowers may qualify. Rates and terms are for illustrative purposes only; your actual rates and terms may be different. Please contact Neighborhood Loans for current rates and programs. Neighborhood Loans is an FHA approved lender, not endorsed by or affiliated with any government institution. Not to be considered tax or financial advice. Please consult a tax or investment professional.

help family members purchase a home for a loved one