Non-Occupant Loans for Kiddie Condos and Joint Ownership

Buy a Home With Friends or Family

Thinking about buying a home but feeling the weight of those mortgage figures? Consider diving into the realm of homeownership with friends or family — sort of like phoning a friend to help you answer a tough question on “Who Wants to be a Millionaire?” As long as at least one of the borrowers resides in the home, anyone (anyone who is qualified to hold a mortgage, that is) may be part of the home loan.

Here’s the lowdown: there’s a role called “non-occupant,” where someone’s name is on the loan but they’re not calling the place home sweet home. Both the non-occupant and the person living in the house share the financial responsibilities of homeownership (mortgage payments and maintenance duties) even if they aren’t both kicking their feet up from the same couch in the same living room each night. Still, for the mortgage tag team to work, one person must live in the house. This unique approach to homeownership is a collaborative and commitment-filled venture that can make owning a property more feasible and less stressful.

Non-occupant mortgage down payment requirements range anywhere from 3.5% to 25% depending on who you buy with, and if the property is considered an investment home, second home, or primary residence.

How to Buy a Home With Multiple Owners

Pursuing joint ownership, whether you’re buying a house with family members or friends, is all about collaboration. For starters, both parties must come together to meet the standard loan requirements. From there, their finances are pooled together to secure the mortgage, but financial strengths aren’t the only aspect lenders consider. Just as income is combined for co-buying and joint ownership ventures, lenders will group together both borrowers’ debt and credit scores, and the borrower with the lowest credit score takes the spotlight. So, if you’re considering co-buying a home with someone else, keep that in mind.

Basically, joint ownership is like a financial potluck – everyone brings something to the table. Plus, there’s the added perk of sharing those homeownership responsibilities. From fixing leaky faucets to making mortgage payments, you’re all in it together. Remember, while it might sound like a breeze, clear communication and trust are key. Lay out the game plan, be open about finances, and make sure everyone’s on board for the long haul.


Non-Occupant Conventional Loan
A non-occupant Conventional Loan is a smart financing option that lets you invest in real estate without residing in the property. To qualify, you’ll need a minimum credit score of 620, and you can secure the property with as little as a 5% down payment depending on who you purchase the property with — although, if you put down 20%, you may be able to forego mortgage insurance, which is a pretty significant cost-saving benefit. Non-occupant Conventional Loans usually come with lower interest rates, too, making them an attractive choice for buyers interested in saving money over the life of the loan.


Non-Occupant FHA Loan
Non-occupant FHA Loans combine affordability, flexibility, and accessibility. With just a 3.5% down payment requirement for purchases with family, this financing avenue is accessible and affordable. The flexibility extends to credit requirements as well, with a minimum credit score of 580 required to secure a non-occupant FHA loan. These loans also don’t have any geographic restrictions, so whether you’re eyeing properties in bustling cities or serene countryside, these loans offer financing opportunities. Non-occupant FHA Loans provide a substantial maximum loan amount of $472,030 for single-unit homes in 2023, opening buyers up to a wider range of properties.


Non-Occupying Co-Borrower Mortgage Use Cases 

When you think of more than one name being on a mortgage, your mind probably fixates on married couples, but there are so many other unique joint ownership situations, from parents to friends.


Kiddie Condo
Not to be confused with a kitty condo (those carpet-covered cat towers), a “kiddie condo” refers to a non-occupying co-borrower mortgage strategic situation, often utilized by students or young first-time home buyers, to overcome income and credit barriers for mortgage approval. Typically involving a family member like a parent or grandparent, this approach allows the student to secure a mortgage by leveraging the co-borrower’s stronger financial profile. The term “kiddie condo” often pertains to situations where a student buys a condo as a residence during their college years, offering a unique opportunity to invest in real estate while pursuing education, all with their relative’s help.


Parent-Child Joint Ownership of House
Let’s be real, parenting extends far and beyond raising your kids to adulthood at 18-years-old. Some parents continue helping their children in small and simple ways, and some offer a huge helping hand, going in on a mortgage with their adult children. That particular joint ownership door swings both ways, though. Some parents might have a hard time getting a mortgage themselves and could benefit from their adult children taking on the responsibility with them.


House Hacking or Investment Homes
House hacking or purchasing investment homes is a strategic approach to homeownership where individuals purchase a property with a partner, typically a friend or family member, to jointly share the financial responsibilities. This arrangement allows them to split costs such as the down payment, mortgage payments, and maintenance expenses and is often used as a means to enter the real estate market or generate rental income by renting the property to tenants.


Buy a Home With Friends
Just as you would go about buying a house with family members, some buyers will pool together their resources with their friends to take joint ownership of a property. Just make sure your friendship is solid and will last as long as your mortgage does.


Benefits of Non-Occupant Co-Borrowers

Non-occupant co-borrowers offer valuable advantages in real estate transactions. They enable individuals to purchase homes even when they lack sufficient income, assets, or credit on their own. This support extends to investment properties as well, where the down payment requirement is typically higher. This collaboration not only expands purchasing options but also enhances financial opportunities for those who may not qualify independently.



Frequently Asked Questions

Does a co-borrower have ownership?
Yes, each co-borrower shares joint ownership of the home, even if they are a non-occupant co-borrower.


Who is responsible for making payments in a jointly-owned home?
All borrowers are responsible for payments, although co-owners can work out individual agreements on their own terms.


Does being a co-borrower help your credit?
Being a co-borrower can impact your credit, and if payments are made on time, it could contribute positively to your score.


How many co-borrowers can be on a mortgage?
Up to four co-borrowers can be on a mortgage together. Keep in mind, each additional person added to the mortgage will add to the complexity of the loan and joint-ownership situation.


Subject to credit approval, not all borrowers may qualify. All information is for educational and illustrative purposes only. Not a commitment to lend, and not financial advice. Not affiliated with or endorsed by any government institution. Please contact us for eligibility and quotes.

Buy a Home with Friends or Family!