Buying a condo as co-signer with son

That's probably about as low as you will get if you told them that you will be renting out the third bedroom. my rental properties are around 4-4.5%.

quote:

---

would it be possible to put it in his name and co-sign to get a lower interest rate? Is this feasible?

---

I may have this wrong, but assuming you have the better credit score, I don't see how adding someone with a lower score would improve your rate.

His credit likely worse than yours and will drag the qualifying score for the loan down to his score, if he even has credit. If he isn't making income but has debts to his name, it will hurt your DTI on the loan. Just do a second home, but it has to be more than 100 miles from your primary for that. If it's within 100 miles, it'll be an investment property. Hell after they graduate, keep the place and make passive income renting it out to college kids or whoever. Let renters pay for your equity in the property while it appreciates.

No reason to put his name on it

Putting it in your son’s name as primary residence equals lower rate. You will be on the loan as an equal, non-occupying coborrower. Renting out the 3rd room is immaterial, no point in bringing that up.

As long as his score is at least 700 with 20% down then the rate should be low to mid 3’s on a primary residence loan type. This will be better than just you alone(even if you have 740+ credit) on an investment property rate in the mid 4’s. FNMA recently released an amendment to reduce their overall risk(you can Google FNMA 7% rule) and exposure to investment and second home properties, thus lifting rates on those transactions about .75% to 1% higher, effectively overnight. Now, if his credit score is 640, then yes the rate might be in the low 4s and wouldn’t matter which way you do it.

Simply put, if his credit is good, put it in his name as primary with you as non-occupying co-borrower. Conventional fixed rate mortgage 30 years. Done and done.

All that is said here is correct- If he has income and the DTI is below 43%, then put it in his name because you would get primary residence quotes. Just guessing here but on a $250k investment with 20% down, 760 credit score, I am pulling up 4.375%. If you take the same situation for primary, conventional is 2.99% and FHA is 2.5% - Big difference in rates due to the 7% rule.

quote:

---

Simply put if his son has no income he can't be the primary borrower. There are guidelines in place.

---

I have to respectfully disagree and say that is inaccurate. You do not have to list an employer for that borrower(the son) on the 1003. The dad can be the only income listed as well as asset source, putting down 20%.

The specific rules and regs for FNMA do not specify any certain amount needed from the son, in this case.

Of course...as long as the payments are made on time. Having a blend of credit between revolving, installment, mortgage etc will help as his history grows. Once again, all on time payments and low card utilization maintained.

The son will have to understand this payment is in his name and when he buys his next primary residence years from now then this condo may need to be sold prior, OR use a lease to offset the mortgage payment(vacated primary residence allowed to use lease income to offset payment) OR if dad makes every payment then 12 months of dads payment can be documented to not count the payment. The last option may be a little tricky, however I don’t know if FNMA would care, may be gray area and underwriter discretion since it would be the son’s primary so the lease is probably the easiest(assuming he goes straight from this condo to his next home in a few years.)