+1 vote
We are looking to purchase a house for our Mom and Father to retire in. I have two other brothers who would be able to assist with making payments in addition to my parents. We wanted to reach out to understand what would be the best way to finance this purchase if five different individuals will be making payments. Should we all be co-signed on the loan?
asked Feb 4, 2018 in General Financing by Mike

2 Answers

+1 vote
Good morning, Mike, and thank you for writing. The best loan program for you depends on several factors -- for example, the credit scores of everyone involved, the size of your down payment, and whether your parents will be on title to the home and on the mortgage. If you can answer these questions for me, I can give you more targeted information.

Assuming that your parents will be on title and the mortgage, there are several options -- both conventional (non-government) and government-backed.

First, you need to decide if you are all going to be co-signers or non-occupant co-borrowers, or just contribute sometimes to help the household. Co-signers have the highest risk, because if the borrowers fail to pay on time, their credit can be harmed. And if the borrower defaults, the co-signers are on the hook for the loan balance. Yet they have no ownership interest in the property.

Non-occupant co-borrowers are on title to the property and obligated by the mortgage. So you'd be able to have some ownership interest; the title company or attorney can help you divvy it up according to your wishes and contributions.

Conventional loans like Fannie Mae's HomeReady or Freddie Mac's Home Possible program with non-occupant co-borrowers require at least five percent down. Here is an article about this program that should help you:
https://themortgagereports.com/24248/home-possible-versus-homeready-which-is-better

FHA also lets families assist their loved ones with mortgages, and there is more flexibilty with credit and a lower down payment requirement. Here is information about the program:
https://themortgagereports.com/19948/fha-non-occupant-co-borrower-family-mortgage

Or, you can just complete this quick form
https://themortgagereports.com/ratequote

and get connected with lenders who can help you with all options available to you.
Good luck! And again, I can get more specific if I have more information.
answered Feb 5, 2018 by GinaPogol (47,650 points)
edited Feb 5, 2018 by GinaPogol
0 votes
The less the number of borrowers the better. Why would you want all 5 families liable. Just put one or two borrowers on the loan and all 5 people can go on title. If one person qualifies income wise, then just have that one person. You only add more borrowers if the one borrower cannot qualify incomewise. Hope this explains your concerns.  Second home financing require 10% down payment.

Gustan Cho NMLS 873293
The Gustan Cho Team at USA MORTGAGE
answered Feb 6, 2018 by GustanCho (106,540 points)

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