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Parent and Child Co-borrowers: What You Need to Know

10-16-2019About MortgagesEddie Knoell

In this episode, we covered how a parent can purchase a home for their child while treating it as a primary residence, allowing for better rates and lower down payments. The good news is that this can also be done the other way around, with the child helping out the parent.

A majority of these loans are for when the child’s in school and the parents want to help out and buy a condo. In this scenario, the parents have the financial ability to help their child and even though the child does not currently have an income, they will occupy the home and will also be on the loan. This allows us to treat the property as a primary residence even though the parents are providing all the income and assets. It’s a similar situation to having a co-signer or a co-borrower.

Because both parties will be on the loan, we still look at credit and the characteristics and profiles of the borrower. We’ll be looking at the credit scores of the parent and the child and we’ll use the lowest mid score of either one. Descent credit is required and if someone has bad credit, they can’t be on the loan. And if the child or parent can’t be on the loan, then this property would have to be treated as an investment home. A caveat though, is if a person is disabled you are able to buy the home for them without them on the loan.

If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can email your questions to team@azmortgagebrothers.com or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

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Thanks for listening and reading the Mortgage Brothers Show. Let us know if you have any questions you’d like us to answer on this podcast. You can email your questions to Tom@AZMortgageBrothers.com or Eddie@AZMortgageBrothers.com.

Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.

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