Is a Family Opportunity Mortgage right for you?

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Is a Family Opportunity Mortgage right for you?

If you are interested in purchasing or refinancing a home for your elderly parents or disabled children, a Family Opportunity Mortgage might be the best option for you. This little-known benefit could save you money on your interest rate and down payment if you plan to purchase a second home for your parents to reside in.

What is a Family Opportunity Mortgage?

While often referred to as a Family Opportunity Mortgage, this benefit is actually a conventional loan with guidelines from Fannie Mae, the government-sponsored enterprise that sets requirements for many mortgage loans.

The requirements from Fannie Mae state that there are conditions under which a residence can be considered a principal residence, even though the borrower will not occupy the property. These conditions include multiple borrowers, military service members, parents or legal guardians wanting to provide housing for their disabled adult children, and children wanting to provide housing for parents.

Typically, when purchasing a property you don’t intend to live in, you will pay higher interest rates with a higher down payment. The guidelines from Fannie Mae, referred to here as the Family Opportunity Mortgage, allow you to open a mortgage for your parents or disabled adult children as if it were your primary residence.

If your parents are unable to work or do not have sufficient income to qualify for a mortgage on their own, you can make a home purchase or refinance a home for them. Under this scenario, you would be considered the owner/occupant, and your parents would not be required to be on the mortgage application or title.

How do Family Opportunity Mortgages work?

In the event you decide you want to purchase a home for your elderly parents or disabled adult children, and if you have enough income, assets and credit, you may qualify for a Family Opportunity Mortgage. Here are the steps to purchasing a home for your eligible relative:

  1. Create an account and fill out an application. Follow the steps provided on the Mortgage Application How-To page, including uploading the required documents.
  2. Chat with one of Southland’s real estate experts and obtain your pre-approval. Your pre-approval will allow you to shop for your desired home. You can even choose to lock-in your rate for 60 days while you look for your home.  
  3. Find your home. Pick a home within your budget that meets the needs of the relative you are purchasing it for.
  4. Provide the necessary documents. You may be asked to provide documentation that shows your parents are unable to qualify for a mortgage or proof of a child’s disability.
  5. Close the loan. Sign your documents, send your down payment and wrap up all the final details.

Benefits of a Family Opportunity Mortgage

  • You are not required to live in the home. With a Family Opportunity Mortgage, you are not required to live in the home to qualify for an owner-occupied mortgage.  
  • Lower interest rates. Interest rates are lower for owner-occupied mortgages like Family Opportunity Loans when compared to rates for second homes or investment properties.
  • Lower down payment. The minimum down payment for a Family Opportunity Mortgage is 5%.
  • Lower property taxes. With an owner-occupied home, you may qualify for a tax exemption.
  • Tax deductions. Your mortgage interest and property tax may be tax deductible. Consult with a tax professional to discuss your specific situation.

FAQs

Does Southland Credit Union offer Family Opportunity Mortgages?

Yes, you can get a Family Opportunity Mortgage from Southland! If you have questions about your family’s eligibility, please contact one of our mortgage consultants.

Is the Family Opportunity Mortgage program still available from Fannie Mae?

Yes, while Fannie Mae no longer refers to it as the Family Opportunity Mortgage, the guidelines are still in place. We are using the term Family Opportunity Mortgage in this article as a means to communicate the benefit.

Can I buy a home for someone who is not a family member?

Yes, you can buy a home for someone who is not a family member, but you will not qualify for owner-occupied financing.

Loans are available to Southland Credit Union Members only. Credit Union Membership is subject to eligibility. Loans are subject to credit and collateral qualification, other fees and conditions may apply. Rates are subject to change without notice. Other rates may apply based on your individual credit profile. NMLS #685526.