FHA is the loan of choice for parents that want to help their kids buy their first home. Even if your son or daughter is in college and has no income, if you are on the loan with them, FHA will allow your income and assets to be used to qualify for the home purchase. As long as you meet the lending requirements to qualify, your kids can be in their first home while they are attending school. How cool is that?
That's been a big advantage to using an FHA loanL conventional loans require sufficient income and are not as accomodating for a "non-occupying" coborrower.
Another big advantage is the down payment: today's minimum down payment is only 3.5 percent and the ENTIRE down payment can be a gift from you to your children.
Add on another huge plus: FHA loans are at or below 5.00% today. Amazing.
Not to sound like an info-mercial, but yes, there is more.
Sellers can contribute funds to typically cover ALL of the CLOSING COSTS AND PREPAIDS (taxes and insurance and interim interest on the new loan).
And finally, here's the biggest kicker yet -- and good only through Nov, 30, 2009:
According to the IRS fact sheet, your son or daugther can claim their entire first-time home buyer tax credit as long as they close before Nov. 30, 2009,
Here is the text from the IRS on this example:
Q. Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much?
A. Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A's primary residence.
http://www.irs.gov/newsroom/article/0,,id=206294,00.html
And the best site to referesh yourself on the tax credit rules:
http://www.federalhousingtaxcredit.com/2009/faq.php#1
Again, FHA, all the way to November 30, 2009
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