This post was updated on 4/24/15 to reflect updated information.

Not many people know about this Fannie Mae mortgage program, so please keep it in mind as an opportunity.  Fannie Mae’s Family Opportunity Mortgage helps families buy or refinance a home for elderly parents or disabled children and take advantage of owner-occupied interest rates.  So even though the qualifying family member may already have an owner-occupied home, they can still take advantage of this program.  Otherwise, the loan would have to be structured as an investment property, which has higher interest rates, qualifying restrictions and larger down payment or equity requirements.

Here are general requirements for the Family Opportunity Mortgage.

Assisting your elderly parents:

  • Must be able to document that the parents are unable to afford the mortgage (provide parents’ tax returns)
  • You must qualify for both your home and the parents’ home
  • Property must be occupied as the primary residence by the parents
  • Property location can be near you; it does not need to be a certain distance away
  • Must provide a letter explaining the parents’ financial inability and their intent for occupying the home

Assisting your disabled adult child:

  • General requirements are the same as assisting elderly parents, but must be able to document that your child is disabled.

Some additional information and requirements:

  • You cannot own any investment properties
  • Purchase or rate & term transactions only (no cash-out refinances allowed)
  • Family member you are purchasing for does not have to be on the loan or on title

Interest rates on this program are the same as rates for a primary residence purchase, since this is how the loan is structured.  There is no other case where having two “primary” residences is acceptable.