Buying a home with Mom & Dad

In this article, we’re going to explain how your parents can help you buy your first home. When people say “buying a home with your parents,” it can mean two different things. One is actually purchasing a home together and all living in it. The other is having your parents on the loan to help you qualify, even if they won’t live in the property. Both can be great options for a first-time homebuyer.

The first option is buying a home with your parents and all of you living there. This usually gives you the best loan terms and the most program choices because the home is fully owner-occupied. You can qualify for FHA, Conventional, and even non-QM loans if needed. If your parents are also first-time buyers, you may be able to purchase with as little as 3% down on a Conventional loan or 3.5% down with FHA.

The second option is when your parents co-sign but do not live in the home, usually because they already own a property. In this case, the loan programs are more limited. FHA is not available because it does not allow non-occupant co-borrowers. However, you can still use Conventional financing, typically starting at 5% down, or non-QM options, often around 10% down. When using your parents’ income, their existing mortgage payment must be counted against them, but the remaining income can still help you qualify. With certain non-QM programs, if your parents earn more than you and have stronger credit, the loan can even be based on their FICO score.

Bottom line, both strategies can work. Whether your parents live with you or simply help you qualify, the right structure can make homeownership possible much sooner than trying to do it on your own.