If you're interested in buying a home with your parents, you have a third option: a non-occupying co-borrower loan. The U.S. Department of Housing and Urban Development (HUD) notes, in chapter two of its Mortgage Credit Guidelines, that the occupying co-borrower loan provision's purpose "is to enable a family member to have a joint interest in a property that would enable another family member to attain principle residence homeownership." Parents qualify as the occupants with such a loan so long as the co-borrower is "related by blood, marriage, [or] law," or able to "document evidence of a family-type, longstanding, and substantial relationship."
The non-occupying co-borrower provision is useful for adult children of elderly parents because it allows a borrower to have multiple Federal Housing Administration (FHA)-backed loans - in other words, it allows someone who already has an FHA-backed mortgage to buy a second home for a parent without being considered a private investor. When elderly parents can't work and need housing, this option can allow their children to cosign on a loan in order to help meet income requirements. Source: Market Insider-Insider Tips
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