College is getting more expensive and based on what I have seen since I was twenty, I don’t think the costs of college are going to go down anytime soon.  So if  you happen to be a parent that is sending one of your kids off to you already know that it is going to be expensive regardless if it is Sanford Brown or Stanford.  But what you may not know is that there is an FHA loan program that may be able to help you lessen the financial blow by saving some money on rent while Junior is there.

Enter the FHA Kiddie Condo loan.

FHA Kiddie Condo Definition

The FHA kiddie condo loan is actually not an “official” FHA loan program – it is actually a way of describing something that FHA allows called a “non occupying co-borrower”. Since the implementation of the non-occupying co-borrower rule, enough parents used the program to buy their college student a condo that the nickname of FHA kiddie condo loan has stuck.

FHA Kiddie Condo Program: General Guidelines

When getting an FHA loan, if one or more of the borrowers will not occupy the property as their principal residence the following rules will apply:

  • Maximum loan-to-value will be 75% unless the borrowers are related by blood, marriage or law (except for rare circumstances) or for properties that are 2-4 unit properties
  • Everyone who is on the loan, must sign the loan documents and is fully liable for repayment on the loan
  • Everyone who is on the loan must meet the credit score guidelines set by the lender
  • Rules are established so that parents can’t develop a portfolio of rental properties

With the rising costs of college and the recently depressed price of real estate, it may make more sense than ever to look into the FHA Kiddie Condo loan as a way to make sure you get the best bang-for-your-buck.  If nothing else, it may be your child’s first finance-related course – taught in the real-life school of hard knocks.

Photo credit: Wikipedia

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