Kiddie Condo Loans? What Are They?
The Kiddie Condo loan program is offered by the Federal Housing Administration (FHA), and it is designed to provide a way to help young adults purchase their first homes. A Kiddie loan allows the parents to co-sign on their children’s mortgage so they can be joint owners. There are some restrictions for the people who qualify and it is directed at younger buyers who are still in school, but the program can be very beneficial for those who are able to qualify. The main requirement for this loan is that one of the signers must live in the property as their main residence. You are not allowed to rent your new home to a third party, you’ll have to live in it yourself.
A common misconception is that “Condo” in the name means that it is always for condos. However, that is not true because this loan is applicable for single family homes, townhomes, or condos. All of the requirements must still be met regardless of the type of home.
One advantage that comes with a Kiddie Condo Loan is there is a very low down payment of 3%, this is significantly less compared to other common mortgage programs. Another benefit with the Kiddie Condo Loan is that there is a much lower interest rate on the loan. This will basically save money in the long term as well on the monthly mortgage payment. Finally, both a parent and a child can financially benefit from this loan. For example, the daughter of the co-signer on the FHA Loan, can start to establish her own personal credit as long as she pays her mortgage payments on time.