I wanted to write about a scenario where you are either buying a second home or a home for a family member who can’t qualify.
You may not know but you may purchase a second home either within your same city or outside of it depending on the circumstances.
Your second home may also be a vacation property or a property for a family member who cannot currently qualify themselves.
These may be done with as little as 5% down payment!
Buying a second home with only 5% down
Here are some of the potential scenarios these programs fit:
- Buying a residence for a student whether in town or not
- Buying a residence for a direct family member who cannot currently qualify themselves
- Buying a residence for a family member who is just starting their career
- Buying a vacation property or second residence for yourself
There are many other scenarios, but those are some main ones that are common.
When purchasing in these situations you would treat it just like you were buying a home for yourself and all your debt and income will come into play.
- Your existing mortgage, property taxes, credit cards, loans, etc
- Your existing mortgage cannot be debt serviced unless you are planning on converting it into a rental property. The full debt from the property will apply.
- This means you will need to act as though no income is coming in from your new property or your existing owner occupied even if your parents will be paying you a rent.
- The down payment cannot be a gift if you are buying for a family member but may be a gift if you are buying as a second home / vacation property.
There are many more details about each of these scenarios but the main item I wanted to be clear on is you can complete any of these scenarios with as little as 5% down payment!