Buying real estate for a child and using FHA loan

Member since 2025 · 10 posts · 2 votes

I heard that you can use a second FHA loan if you buy a property for your child, wondering if this is true. Has anyone heard of FHA 203K loans? It is essentially a renovation loan built into mortgage, pros and con of the loan?

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Elyse SarneckyBusiness Member

Property Manager · Detroit, MI · Member since 2024 · 47 posts · 20 votes

@Samantha Bartlett, great questions. Yes, you can potentially take out a second FHA loan if you're purchasing a home for your child as a non-occupying co-borrower, but there are specific FHA guidelines that must be met. The key requirement is that your child must live in the property as their primary residence—FHA won’t allow a second FHA loan just for an investment or vacation home.

As for FHA 203(k) loans, they can be a great tool, but they require extra patience. The biggest advantage is that they allow you to roll renovation costs into the mortgage, meaning you can finance both the purchase and the rehab with a low down payment (typically 3.5%). This can be a great way to create instant equity and avoid high-interest renovation loans or credit cards.

That said, the process is more involved. The loan requires FHA-approved contractors, strict project timelines, and extra paperwork. Delays are common, and not all lenders or contractors are experienced with 203(k) loans, which can cause headaches if not managed well. If the home needs major structural work or a complete gut rehab, it can be a great option, but for minor updates, a traditional FHA or conventional loan might be simpler.

If you go this route, working with a lender and contractor who have successfully closed multiple 203(k) loans is key to making the process smooth.

Hope this helps!

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Jonathan KlemmBusiness Member
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Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
1y
Hey @Samantha Bartlett - Can you clarify exactly what you mean by buy a property for your child? Is your child an adult?

We work with a ton of clients on 203k renovation loans. I personally love them and think they are a golden ticket to get into real estate investing with some significant equity right out of the gate! The bank literally allows you to pay for your renovation OVER 30 YEARS! That leverage is amazing and I don't understand why more people don't use it.

Most importantly, find people who have done 203k loans before, specifically your realtor, lender, contractor, and hud consultant. These loans are tough because they require more paper and cause cash flow issues for contractors without good financial status.
If you are looking for a solid lender connect with @Jose Valdovinos! He may be able to help answer the questions about buying in your child's name as well.
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Samantha Bartlett
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Member since 2025 · 10 posts · 2 votes
1y
Yes, thank you Jon! I feel the same, I was going to use 203k for my own house a few years ago but it didn’t work out because I was a buying a house that was at the top of price range. My child is going to be graduating from high school and 18 next year.
I actually have a question for you, I’m going to message you.

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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
1y
@Samantha Bartlett Yes, you can get a second FHA loan if you buy a home for your child as a non-occupying co-borrower, but your child must live there as their primary residence, and you must meet FHA guidelines for a second loan.

An FHA 203(k) loan combines purchase and renovation costs into one mortgage, making it ideal for fixer-uppers.
- Pros: Low 3.5% down, renovation funds upfront, and lower rates than personal loans.
- Cons: Strict FHA renovation rules, longer approval process, and mandatory mortgage insurance.
It's great for homes needing major repairs, but if updates are minor, a traditional FHA or conventional loan may be simpler.
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Elyse SarneckyBusiness Member
Property Manager · Detroit, MI · Member since 2024 · 47 posts · 20 votes
1y
@Samantha Bartlett, great questions. Yes, you can potentially take out a second FHA loan if you're purchasing a home for your child as a non-occupying co-borrower, but there are specific FHA guidelines that must be met. The key requirement is that your child must live in the property as their primary residence—FHA won’t allow a second FHA loan just for an investment or vacation home.

As for FHA 203(k) loans, they can be a great tool, but they require extra patience. The biggest advantage is that they allow you to roll renovation costs into the mortgage, meaning you can finance both the purchase and the rehab with a low down payment (typically 3.5%). This can be a great way to create instant equity and avoid high-interest renovation loans or credit cards.

That said, the process is more involved. The loan requires FHA-approved contractors, strict project timelines, and extra paperwork. Delays are common, and not all lenders or contractors are experienced with 203(k) loans, which can cause headaches if not managed well. If the home needs major structural work or a complete gut rehab, it can be a great option, but for minor updates, a traditional FHA or conventional loan might be simpler.

If you go this route, working with a lender and contractor who have successfully closed multiple 203(k) loans is key to making the process smooth.

Hope this helps!
[email protected]800-331-0646
Marketplace Homes11 Review
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