How to Save Thousands on Your Student's Housing

Most of my friends know I'm in real estate and sometimes ask me for that piece of information that seems unfair to know...

Here you go.

Ever heard of the FHA 203B non-occupying co-borrower loan program? One of the best programs for first-time homebuyers struggling to qualify on their own.

First, some background on why we use these so much. Being in Tallahassee, we have two universities and many out-of-area parents looking for ways to save on student housing costs. We use this program for many young professionals buying their first home too.

Not all lenders do them, and this is a great tool to help family members buy a home. (Any family member, including the problematic brother-in-law lurking in the basement.)

Here's what you need to know about co-signing for an FHA loan.

The qualifications are typical for FHA loans, the primary borrower must live in the house. Down payments start at 3.5% with a 96.5% loan to value ratio. The primary borrower does NOT need to have an income. (Yep... ain't that handy?)

The co-borrower does not need to live in the home but must be a relative of the primary borrower. Both incomes and debts are taken into consideration for ratios.

Primary borrower can file for homestead exemption for tax relief purposes and this does not have any impact on the co-borrower's homestead.

My broker has used these for her children and there is a downside. The mortgage will appear on your credit report. HOWEVER, if you provide 12 months of canceled checks showing that the primary borrower is paying the mortgage, then you can have this mortgage removed from debt-to-income ratios for your next purchase.

We used this in 2016 for an FSU student (whose mom was a loan officer). She bought a home for $80k and paid $3000 at closing. Even with additional inspection costs, she moved in for less than what an apartment complex across the street from FSU quoted her. AND her monthly payment was less AND she got to keep her dog (and cat) AND had a small yard to enjoy. She's thinking about listing that house this year for $170k. Great nest egg to start her professional career in another state.

This year another young lady used it with Grandmother's help, and after the seller paid closing costs (yes, we are still seeing them occasionally here is rustic and entirely reasonable Tallahassee) she paid $800 at the closing table. Grandma paid 3.5% on the $142k for her. She now has a 2/2 with a yard to herself for $800 a month. That is a lot less than she was paying in rent near FAMU for a shared smaller place with no private outdoor space.

Finally, I love to do business with friends. Contact me even if you think the question is silly or that you might bother me. It's not silly. You won't bother me. I can help you find trustworthy agents anywhere you are going and would love to help you in the Big Bend area of Florida.

You can find more information for buyers and sellers on my website and blog!

https://livingintallahassee.com/how-to-save-thousands-on-housing-your-fsu-famu-student/