Help with Family Opportunity Mortgage Rates?

Seeking Advice
1

I’m in the process of buying a house for my mom using the Family Opportunity Mortgage program. This program allows children to buy homes for parents who can’t afford a mortgage, while still being considered a primary residence instead of a second home or investment property.

I already own a home with my husband (purchased in 2019), but since only his name is on the mortgage, I qualify independently. My income is $51k annually, my FICO score is 802, and my only debt is a $50/month HOA fee. I’m putting a 50% down payment ($150k on a $300k home).

Here are the quotes I received:

  • 7.375% from one lender
  • 5.875% with 1.25 points (or 6.0% with 0.75 points) from another lender. Points cost $1,500 each.

I’m looking for advice on how to shop for better rates or if these seem competitive. Any suggestions on where else to look or what to ask for would be appreciated!

2

For the second lender with the 5.875% rate, did they share the rate without points? Also, what state will the home be in?

3

Fallon said:
For the second lender with the 5.875% rate, did they share the rate without points? Also, what state will the home be in?

The home will be in Durham, NC. They didn’t provide a quote without points. To clarify, the rate is 5.875% with 1.25 points or 6.0% with 0.75 points.

4

@Zen
A few things to consider:

  • Refinancing costs in NC are usually low.
  • Rates could be higher tomorrow, so acting sooner might be better.
  • Calculate the break-even point for buying points by comparing payment differences.

Make sure to request the zero-point rate and compare total costs, including fees in Boxes A and B on the loan estimate.

5

@Fallon
Thanks for the advice, I’ll request the zero-point rate to compare!

6

The Family Opportunity Mortgage is just a standard loan that aligns with Fannie Mae’s occupancy guidelines. Most lenders that offer Fannie Mae loans should be able to provide this option.

Keep in mind that getting a 30-year fixed rate in the 5% range likely involves paying significantly more in total fees than just the 1.25 points mentioned. Make sure to review all origination charges carefully.

7

@Bao
Thank you for explaining! This was really helpful in understanding what to ask for.

8

Since you’re not on the mortgage for your current home with your husband, you could technically list this new property as your primary residence. Your mom wouldn’t need to be on the loan but could be on the title.

Also, why such a large down payment? At 50% down, you might be able to secure a better rate with no points.

9

I have a similar family loan. As long as a family member is living in the house, the loan can be considered a primary residence. In my case:

  • The family member doesn’t need to be on the loan but can be on the title.
  • A 20% down payment and 43% debt-to-income ratio were required.

It’s a good option if you meet these criteria.

10

This isn’t a special loan—it’s just a standard Fannie Mae loan with a fancy name. Shop around with different lenders to get the best rate.