If you’re in a position to help your loved ones purchase a home, a specialized mortgage program may make the process easier and more accessible. The Family Assist Program, also called the Family Opportunity Mortgage (FOM), helps eligible applicants buy a home for relatives who may not have the financial means to do so.
Often, the funding helps care for older adults who can’t work, family members who have low incomes or relatives who have disabilities. Learn more about this home mortgage to discover if it’s an option for your family’s requirements and preferences.
What Is a Family Opportunity Mortgage?
Mortgage down payment requirements and interest rates are usually higher on a home a buyer won’t live in full-time. However, eligible applicants may qualify to receive Family Opportunity Mortgages in Michigan to reduce these costs.
This specialized loan allows buyers to purchase a residential property for an aging parent or disabled relative who could not qualify for financing independently. In some cases, the loan program allows parents to buy a home for a disabled child who can’t do so independently.
According to the Federal National Mortgage Association (FNMA), also called Fannie Mae, the buyer is considered the owner-occupant in this situation. As a result, the mortgage is subject to the same guidelines and rates as an owner-occupied home, even when the owners don’t live there.
Importance of Family Opportunity Mortgages
While purchasing a house is an investment, the upfront expenses are often worthwhile. In many cases, a Family Opportunity Mortgage in Michigan could cost less than rent at nursing homes or assisted living facilities. If a family member needs specialized care, having nurses or direct support professionals drop by and provide daily or weekly services as needed could offer a more cost-effective option.
Living in a home gives family members more freedom to enjoy daily activities. Instead of feeling confined to a small room and community lounge, your relatives can live in a comfortable environment. Spacious living areas can also encourage your relatives to increase their mobility and pursue meaningful hobbies that spark joy.
Advantages of Choosing FOMs
Family opportunity loans offer various benefits, including:
- No occupancy or distance requirements: Borrowers who take out the loan aren’t required to live on or near the property. Homeowners who don’t live there can still qualify for owner-occupied financing, which offers saving opportunities.
- Lower down payments: Buyers of second homes and investments usually have to pay a minimum down payment of 10% of the property’s purchase price. Borrowers who use an FOM may qualify to pay a minimum down payment of around 5%, which can significantly lower the upfront expenses of buying the home.
- Reduced interest rates: Homebuyers may qualify for Family Opportunity Mortgage rates when they purchase a home for a relative who has a low income or cannot work. Borrowers can enjoy lower rates and monthly payments with the FOM.
- Lower tax rates: Homeowners may classify their homes as owner-occupied to taxing authorities, even when they’re not. FOM borrowers who qualify for a tax exemption can reduce the property taxes they owe.
- Tax deductions: Borrowers of an FOM can file tax deductions for multiple properties — the home they reside in and the home they purchased for a relative. Specifically, homeowners can claim the property taxes and mortgage interest when they file taxes.
Who Can Benefit From a Family Opportunity Loan?
To be eligible for an FOM, homebuyers must demonstrate that a relative can’t work or has insufficient income to qualify for a mortgage. They must also meet these requirements:
- Credit score: Borrowers must have a 620 minimum credit score. In some cases, the requirements with lenders may vary.
- Employment: Loan applicants must show a history of steady employment. Additionally, the borrower must demonstrate an ability to afford new mortgage expenses and their current housing costs.
- Documentation: Homebuyers must prove that their relative cannot afford the home independently. Some examples of accepted documentation include pay stubs or Social Security award letters.
- Debt-to-income ratio (DTI): Loan borrowers must demonstrate they make more than they owe. Specifically, the applicants must have a maximum DTI of 45%.
How to Apply for the Family Assist Program
Are you preparing to help your parents live comfortably? Or are you planning to support a relative who has a limited income or can’t work? Applying for an FOM is an ideal way to accomplish your goals.
Step One: Get in Touch With Lenders
Have confidence in making informed decisions when you meet with Family Opportunity Mortgage lenders. Knowledgeable and experienced loan officers can discuss your needs and answer your questions.
Step Two: Obtain Pre-Approval
Work with lenders or use a mortgage calculator tool to get a loan estimate. Having a tentative amount with a mortgage pre-approval allows you to shop for properties within your budget.
Step Three: Browse Properties
Explore neighborhoods and communities with a trusted realtor. Narrow down your options to find a single-family home or another suitable property.
Step Four: Provide Documentation
Gather necessary documentation, such as financial proof that a parent cannot take on a mortgage or medical forms indicating a condition that prevents a relative from working. Family Opportunity Mortgage lenders can help you prepare your paperwork or complete an application online.
Step Five: Close on the Loan
Submit your application with the necessary documentation. Wire a down payment and closing costs to the appropriate entity and take care of any final details.
Potential Drawbacks and Considerations
Planning can provide a seamless experience from start to finish. Before submitting your loan application, consider these factors:
- Home care solutions: Do your family members have the means to perform daily tasks and activities independently? If not, consider whether your relatives could benefit from the frequent and consistent care provided by nursing homes and assisted living facilities.
- Home maintenance: Will someone need to visit your relatives to take care of essential chores such as dishes, laundry, household tidying and occasional maintenance? Plan if a family member will take ownership of those responsibilities or if you’ll need to hire an outside source to complete those tasks as needed.
- Cosigner variables: Are you thinking of cosigning on the FOM? Consider the cosigner’s debt and income before completing your application to ensure they meet the ratio requirements.
- Payment plans: Who will be responsible for paying the mortgage? Make a plan to ensure each payment is paid in full and scheduled accordingly.
Who Offers Family Opportunity Mortgages?
Homesite Mortgage is proud to offer FOMs to eligible applicants throughout Michigan. Our loan officers can discuss your needs and plan accordingly. We offer low interest rates and closing costs, allowing you to save money throughout your homeownership journey.
Applying for a mortgage is simple and quick with us — we offer an easy online experience with state-of-the-art technology to keep your personal information as safe as possible. We typically close a loan in around 18 to 20 business days.
Find Low Rates and Support Your Relatives Today
Are you interested in using an FOM to buy a home for a family member? Homesite Mortgage is ready to help. We provide exceptional customer service and have many resources to help you make informed decisions. Feel free to use our mortgage calculators or browse our learning center online.
To get started, contact our team or request a loan pre-approval today.