The Kiddie Condo Loan in Florida: Parents Co-Signing for a Student's Home
A kiddie condo loan Florida parents use lets a student buy near campus with a parent as non-occupant co-borrower on an FHA loan. The student holds title and the family avoids rent.
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A kiddie condo loan Florida parents use lets a college student buy a home near campus with a parent as a non-occupant co-borrower on an FHA loan.
The student is the owner-occupant, the parent supplies the income, and the family stops paying rent. Our FHA loan page covers the base programme.
How it works
FHA allows a non-occupant co-borrower who is a family member.
See our guide to non-occupant co-borrowers in Florida.
The student occupies; the parent qualifies.
The standard 3.5 percent down payment applies.
The HUD handbook sets the family-member rule.
Why FHA and not conventional
Conventional loans allow non-occupant co-borrowers too, but with different down payment rules.
See our guide to FHA versus conventional in Florida.
FHA's 3.5 percent with a non-occupant co-borrower is the easiest entry.
Conventional may be cheaper with a larger down payment and good credit.
Compare both.
The student's role
On title and on the note.
Must occupy as a primary residence.
Student income, if any, can count.
Credit history can be thin; the parent's carries the file.
The student builds credit and equity through college.
The parent's role
Income, assets and credit are underwritten as a borrower.
Both the parent's own housing payment and the new one count.
See our guide to maximum DTI in Florida.
The parent is fully liable.
A late payment hits the parent's credit.
Roommates and rent
The student can rent rooms to roommates.
That income does not count for qualifying.
See our guide to house hacking in Florida.
It does offset the payment in practice.
Check local occupancy limits and the association's rules.
Condo approval
Most near-campus condos in Florida are not FHA approved.
See our guide to HOA and mortgage approval in Florida.
A single-family home or townhouse avoids the problem.
A conventional loan on a warrantable condo is the alternative.
Check the building before falling in love with the unit.
Florida campuses
Gainesville, Tallahassee, Orlando, Tampa, Miami and Boca Raton all have buyer markets near campus.
See our guide to first-time home buyers in Florida.
Prices vary widely between them.
Rental demand after graduation is strong in all of them.
The exit is a sale or a rental.
Homestead
The student, as owner-occupant, can claim homestead.
See our guide to the Florida homestead exemption.
That requires Florida residency, which affects in-state tuition and other things.
An out-of-state family should weigh that.
The exemption is worth real money.
Insurance
A standard homeowners policy in the student's name.
See our guide to Florida homeowners insurance cost.
Roommates should carry renters insurance.
Liability limits matter with a house full of students.
The parent may be added as an additional insured.
After graduation
Keep it as a rental, sell it, or the student stays.
See our guide to using rental income to qualify in Florida.
FHA occupancy requires a year; after that, renting is allowed.
A sale after four years often shows equity from appreciation and paydown.
Capital gains exclusion may apply to the student.
Removing the parent
A refinance in the student's name once they have income.
See our guide to refinancing FHA to conventional in Florida.
That also drops FHA mortgage insurance if equity allows.
The parent is released from liability only at refinance or payoff.
Plan for it around graduation.
Gift funds
The parent can gift the down payment as well as co-borrow.
See our guide to gift funds in Florida.
A gift letter and a paper trail.
Closing costs can be gifted too.
Seller concessions can cover the rest.
Risks
The parent carries the payment if the student cannot.
A student who transfers or drops out leaves a house to manage.
Roommate turnover and damage.
Florida insurance increases.
It is a real estate investment with a family tenant.
Compared to renting
Four years of rent versus four years of mortgage payments plus costs.
Appreciation and equity offset the costs in a rising market.
See our rent versus buy calculator.
Transaction costs at purchase and sale are the drag.
A five-year hold usually wins; a two-year hold usually does not.
Taxes
Mortgage interest and property taxes are deductible by whoever pays them, within limits.
See our guide to the mortgage interest deduction in Florida.
Roommate rent is income to the student.
Depreciation applies to the rented portion.
A tax adviser sorts the split.
Setting expectations with the student
The student is a homeowner with a mortgage on their credit report, not a tenant.
Utilities, maintenance and association dues fall to the household.
A written agreement between parent and student on who pays what prevents disputes later.
Roommate leases should be in writing with deposits held properly.
Treat it as the small business it is from the first month.
Where to start
Check the parent's ratios with both payments.
Find a single-family home or an FHA-approved building near campus.
Then start a conversation and we will structure the co-borrower file.