What is a multigenerational home? How does it work?
Less common in the U.S. than in some other nations around the world, several generations of family members under one roof could make housing more affordable.
Nearly 60 million people in the U.S. live in multigenerational situations, up from about 15 million in the early 1970s, Pew Research Center data shows.
Are you ready to explore options for financing a multigenerational living arrangement? Apply now to get started!
What is a multigenerational home?
If grandparents, parents and kids live in the same home, that’s a multigenerational home. It can mean the family is separated on different floors or even come into the home through unique entrances. It could be aunts, uncles, cousins or even siblings, but if there are common spaces under the same roof, multiple generations can live together and help pay the mortgage.
Reasons for living in a multigenerational home
Culturally, multigenerational living is more common abroad but becoming more routine in recent years in the U.S., especially as immigrant families have begun to expand in certain communities.
Economic challenges also could encourage families to move in together and help one another afford more home than they might be able to separately. In fact, financial concerns are the most commonly cited reason for multigenerational living, the Pew report concluded.
As parents age and children come into the family, caregiving needs for both old and young may also lead to multigenerational members joining the household.
Challenges when living in a multigenerational home
Because multigenerational living will mean more people in the home, generally a larger home will be necessary. A larger home in most markets in the U.S. likely will mean a higher purchase price and therefore higher mortgage payments.
Qualifying for a loan could also be more complex as underwriting will need to approve all family members who intend to be on the mortgage. Guaranteed Rate Affinity’s Loan Officers can help you navigate the loan approval and underwriting process.
If you plan to add to your property to make more space for multigenerational members or if you plan to build an unattached living unit on your property, local zoning and permitting regulations could add extra challenges as well.
How do I finance a multigenerational home?
Multigenerational homes can be financed much like traditional single-family properties. Conventional conforming or jumbo loans, FHA loans, VA loans and even home renovation and non-QM loans can be used to purchase or upgrade homes to make space for additional family members.
Mortgage options for multigenerational homes
Traditional mortgage
A 30-year mortgage offers steady interest rates and predicable monthly payments with enough of a loan amount to cover homes in most areas of the country, even larger homes with space for more residents.
FHA mortgage
Make your multigenerational home plans work with an FHA loan. Backed by the federal government, FHA loans feature flexible credit restrictions and down payment options as low as 3.5%. FHA loans are popular for first-time home buyers.
VA mortgage
If you are an active-duty service member, Veteran or surviving spouse, VA loans were created to help you afford homeownership. Backed by the federal government, a VA loan offers less restrictive credit guidelines and low down payment options for you and your family.
Home renovation loan
You can finance a renovation, remodel or addition with a home improvement loan. Home renovation loans let you breathe new life into your home or a home you’re about to purchase. It can be a solid option for adding or adjusting space to accommodate family members.
Non-QM loan
Non-qualified mortgage loans offer options for borrowers who might be self-employed, lack certain documentation or may have credit challenges. Non-QM loans could offer lower down payment options and consider alternative sources of income, which could help in a multigenerational living arrangement.
How can I start the mortgage process today?
Are you ready to explore options for financing a multigenerational living arrangement? Apply now to get started!
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