Kiddie Home Purchases Jump
From the archive, 2012. This is contemporaneous reporting, preserved as it ran. Figures, rates and forecasts in it were current then and are not now.
By Mike Colpitts
A tight mortgage market has triggered a jump in parents, grandparents and other relatives helping younger home buyers qualify 
for a home loan. Baby boomer parents have helped a son or daughter to purchase a home by co-signing for a mortgage, supplying down payments or purchasing a home outright in 20% of purchases in the last year, according to a Better Homes and Gardens survey.
The trend is being driven by a Federal Housing Administration program that allows blood relatives to be part of the mortgage process. The FHA is offering the “Kiddie Condo” program in an effort to re-stabilize the housing market and get younger home buyers to take advantage of lower home prices.
Close to record low mortgage rates, which averaged 3.90% last week on a 30-year fixed rate loan, just two basis points off their all-time low also account for part of the growing trend.
The program was branded as the “Kiddie Condo” plan since many parents are choosing to purchase their college age children a home while their attending college instead of paying rent for campus housing. The residence isn’t required to be a condominium under its guidelines, but may be any type of residential property, including single family homes, condos and townhouses.
The down payments are also lower than standard FHA purchases. Only 3% is required for mortgage borrowers who qualify for the program as a down payment, and mortgage rates are lower than conventional rates offered to home purchasers.
“The changing timetable for adulthood,” is a sociologist’s phenomenon. The program has been explained as a new part of the 20-something generation entitlement culture. The transition into adulthood typically carries five milestones, according to sociologists, graduating from school, leaving home, becoming financially independent, marrying and having a child.