Reuniting the Young and Old: 6 Ways to Finance Multigenerational Homes

Multigenerational homes in real estate has been a rising trend, and still continues to be, since 2009. A record 1 in 5 Americans live in a multigenerational household, meaning one or more adult generations under one roof, according to recent data published by Pew Research Center. In a time where adult children don’t fly the coop as fast, elder parents and grandparents move back into their children’s homes, and some families resort to living together to save money, home buyers need to look deeper into their options.

Here are 6 financing options you’ll want to know about:

 Little to no down payment options exist |

Home buyers no longer need 20% down! There are a variety of home loan products to fit the needs of home buyers in today’s market. Home buyers can purchase a larger home to accommodate the size of their family without a hefty down payment. These products offer down payments varying between 0-3.5%:

  • Conventional – no more 20% down with conventional home loan programs–go as low as 3%!
  • FHA – government-backed home loan program with lower interest rates and low money down
  • USDA – no money down for homes in designated rural areas
  • VA – no money down, no PMI, and lower interest rates, for veterans, active military, and surviving spouses

Build a tiny home in your backyard for your family member |

Also known as “granny pods,” these tiny homes are technically full-functioning, miniature living spaces built in your own back yard. If a “home within a home” doesn’t quite fit your privacy needs, maybe these will. If you are caring for an elderly family member, these are a great substitution to converting to a multigenerational home or nursing home fees.

Multi-unit properties (1-4 units) can be financed with low money down |

That’s right, you can be downstairs, and your family can be upstairs. You don’t have to share a thing other than the roof. FHA financing is great for purchasing a multi-unit property because you can still reap the benefits of a low down payment. Does the property need some work? Qualified home buyers can also use an FHA 203k renovation loan to make repairs and/or updates to the property before moving in. Check to see if you qualify below at no obligation to you:

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Renovate your home for the space you need |

FHA 203K: love the location, but the house doesn’t fit your needs? This loan offers the option to do minor and major renovations to make it your own. Borrower more than the home is currently worth to make renovations.

HomeStyle: similar to the loan option mentioned above, but this loan type is not government-backed. With this loan type, you can also borrow more than the home is worth in order to make renovations.

Cash-out Refinance: if you have enough equity in a current home, use it to renovate and create the space you need.

HELOC: borrow against your equity for lower rates and terms than most home improvement loans or credit card.

Pre-built multigenerational homes are available |

Yep, they’re out there! Since multi-generational homes are a popular trend, home builders have been building new construction homes move-in ready for multigenerational households. With many different layouts to choose from, these families can get the home of their dreams move-in ready for all! Lennar Next Gen calls them “the home within a home.”

Add someone you know to the loan |

It is possible to have a non-occupant co-borrower, which can be a family member or friend who doesn’t live in the home with you. If your income, lack of credit, or debt-to-income ratios are what’s holding you back from qualifying for a home, this is a great option to add compensating factors for more options or lower interest rates.  If the co-borrower is going to live with you, he/she does not need to be a spouse either. A sibling, parent, aunt/uncle, or friend can be a qualified co-borrower on the loan, perfect for families who are combining forces to better afford home ownership or take care of one another.

Don’t shy away from what you want! There are financing options to get the home you need. 

Contact one of our mortgage experts to discuss your options.

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