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  • Writer's pictureRebecca Richardson - Mortgage Consultant

Buying a House For Someone Else? Use the Kiddie Condo Strategy.

Updated: Dec 10, 2023

One of my favorite mortgage strategies, that not a lot of people know about, is called a Kiddie Condo.

The Kiddie Condo strategy is a fantastic option for parents looking to purchase a home for their child. It's a clever way to make homeownership more accessible and affordable. This strategy allows parents to collaborate with their child on the home purchase, with both parties being co-borrowers on the mortgage. But it's not just limited to parents and children; it can also apply to other family members, including in-laws, aunts, uncles, stepchildren, nieces, and nephews, depending on the relationship.

Here's how it works: The child, who will be the primary occupant of the home, joins as a co-borrower along with their parents or other family members. This collective effort helps the child establish the property as their primary residence while benefiting from the combined income of all co-borrowers for loan approval.

Key advantages of the Kiddie Condo strategy include:

  1. Affordability: By sharing the financial responsibility, you can often secure a lower interest rate and make a more manageable down payment.

  2. Ownership Rights: All co-borrowers, including the child, hold equal ownership rights and are liable for loan payments. They also have the option to sell the property to recoup their investment.

  3. Flexible Loan Options: You can choose between conventional or FHA loans based on your specific situation.

  4. Long-Term Investment: This strategy is ideal for families seeking a long-term hold on the property, whether it's for a child attending college or as a future rental property.

  5. Wide Range of Eligible Co-Borrowers: Beyond parents and children, it can encompass various family members, provided there's a documented relationship.

While it's a powerful way to make homeownership accessible, it's essential to consult with a mortgage expert to navigate the process effectively. The Kiddie Condo strategy opens up exciting possibilities for parents wanting to buy a house for their child, ensuring a brighter and more affordable future for their loved ones.

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