A kiddie condo loan is a great home loan program for you or your student, but since the housing meltdown in 2008 the federal guidelines associated with mortgages have become a lot stricter. Before the housing meltdown, a college student could get a kiddie condo loan with no income as long as they had a family member co-sign for them.
General Kiddie Condo Loan Guidelines
Today however, there are some general guidelines you should be aware of, these guidelines are:
- FHA credit underwriting standards MUST be met by every person who signs the loan.
- Every person on the loan is responsible for full repayment.
- Credit score guidelines will be set by the lender and must be met by each person to be included on the loan.
- Those applying are limited to only one 30-day delinquent payments to outside creditors.
- Those applying must also have no accounts in collections, not including medical bills within the past year.
- Borrowers and co-borrowers must be related by blood, marriage, or law or the LTV will be less for a property with 2-4 units.
- Whoever has the lowest credit score between the borrowers is the one used for the loan application.
- Co-signer’s income must be enough to cover their own financial responsibility as well as the new mortgage.
The kiddie condo loan permits non-occupant co-borrowers, meaning, a person who is included on the loan does not need to live in the home. A Kiddie Condo Loan cannot be used for a second or investment home and regular FHA home loan rates will apply. This program does however, allow borrowers to rent to a roommate and if this program is properly used it can help alleviate some of the financial struggles that come with a college student.
Kiddie Condo Loan Benefits
Another great benefit to the kiddie condo loan, it that it allows the borrower to have roommates and an even better benefit is you can charge that roommate rent! This is another great way to alleviate some of the financial struggles a college student might face. Alongside college students having to manage their independence, they also get the chance to act as a landlord which can be a great learning experience for them.
It is important that you know and understand the guidelines that are required with the kiddie condo loan in order to make the loan process as simple as possible. With college costs hitting an all-time high, the kiddie condo loan is a great way to help manage the overwhelming costs of college and college life.
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