Kiddie Condo Loan Rates
If you are considering a kiddie condo loan it is important to know that the same rates as the regular Arizona FHA loan programs apply. This is because the property the loan is being used for is not considered to be a second home or an investment property. The kiddie condo loan is specifically designed for parents to co-sign with a child (usually a college student) on a property, that also permits renters.
- 96.5% is the maximum amount of financing on a single family unit that can be received through the kiddie condo loan program
- Of the co-signers, whoever is making the actual payments on the mortgage with be able to receive the tax reduction
- Interest rates on a kiddie condo loan program can be as low as 3.75%!
Unless the co-signers are related by blood, marriage or law, the maximum loan-to-value ratio for borrowers is 75 percent. If the maximum loan-to-value is under the 75 percent threshold, non-resident borrowers establish eligibility to purchase a 2-4 unit property. However, if the loan-to-value is over 75 percent level, then the non-resident borrower can only use the loan for one property. Under FHA guidelines, maximum financing is available for certain individuals, these include: spouses, parents/children, siblings, stepchildren, aunts/uncles, nieces/nephews and non-relatives who can legally provide evidence or documentation of a long family-like relationship, which was not the result of a loan transaction. The “umbrella liability policy” is something to look into with your insurance provider if the borrower living in the property decides to rent out the remaining space in the property.
Some other features of the kiddie condo loan are a low down payment (possibly as low as 3 percent of the price of the property) and a much lower, traditional interest rate on the loan rather than higher interest rates for investment properties. As with any loan, it is very important that you have a good understanding of what taking out a loan entails. If you are proud parent about to send your child off to college the kiddie condo loan is a great way to securing housing. Being able to co-sign on the loan will allow you to have the reassurance that your child is properly handling their finances. College is an extremely stressful time for parents, using a kiddie condo loan is one way to help alleviate some of that stress!