The fall semester is right around the corner and a lot of families will be sending students to school for the first time. While this can be a very exciting time, it can also be very stressful! Along with all of the excitement, students will be racking up quite the bill! Tuition, books, food, etc. There are so many costs associated with college, but you can take the financial heat off yourself and your student by using a kiddie condo loan on off-campus condo or house! Dorm life can be a lot of fun but also very expensive, off-campus housing options tend to be much more affordable. Before signing up for a kiddie condo loan, here is some important info:
- Who Can Sign?
- Maximum Loan-To-Value
- Is This Technically a 2nd Home?
Who Can Sign for A Kiddie Condo Loan?
Every person on the kiddie condo loan is liable for full repayment, and each person who is on the loan must sign. The lender will set credit score guidelines that must be met by each person on the loan. This type of loan has very specific and strict guidelines in order to prevent parents of young adults from developing massive portfolios of rental companies.
The maximum loan-to-value rate on a kiddie condo loan program is 75 percent. This means that if the loan-to-value rate is 75% or below, the non-occupying borrow can have a multiple unit property. However, if the loan-to-value ratio is higher than 75%, the non-occupying borrow is limited to single unit property
Is This Technically a 2nd Home?
NO. The whole point of a kiddie condo loan is for a parent of young adult (usually a college student) can assist them by signing on an FHA loan, nicknamed a “kiddie condo loan”. Because of this, the property you take out the loan on will not be considered a second home OR an investment property. This allows you to save a considerable amount of money because is not technically an investment property. What you can do is rent out part of the property to roommates, depending if you have enough size. Renting out space in the property is also a really great way to help cover the cost of the home.
A Great Option For the Fall
With the large amount of money that college students spend throughout the school year, a kiddie condo loan is a great way to alleviate some of the financial burden of college. Make sure before you sign up for one that you completely eligible and that is the best option for you and your student.