Do you want the best real estate investment loan in the market today? How about a condominium downtown or near campus or that neat three bedroom you saw last week? There’s a mortgage out there that allows you to buy that property with as fha loans and investment property kiddie condoslittle as 3.5 percent down with owner-occupied rates, even if you don’t live in the home. How can you do that?

 It’s easy with a little preparation and opportunity. The Federal Housing Administration, or FHA, is a government-backed mortgage that protects the bank against default and compensates the lender should the home ever go into foreclosure. However, FHA loans are only for owner-occupied properties and can’t be used for investment real estate.

FHA does have a loophole that other loan programs don’t have. If a relative lives in the home and goes on the loan application with you, the transaction is considered in the same manner as if you lived there. This is where the term “kiddie condo” first originated several years ago. Parents could have their son or daughter co-apply for an FHA loan and live in the property. The lucky kid doesn’t even have to have a job or any income whatsoever. In fact, college towns with an abundance of condos have plenty of kiddie condos. Mom and dad make the mortgage and junior lives in it. Once junior leaves the nest egg a few years later, mom and dad rent it out to another college student or sell the property.

The program, like many others in the past, was abused in part when borrowers weren’t exactly truthful when they said their son or daughter will live in the home. It used to be that an “occupancy affidavit” would be signed and that would be pretty much about it. Today however, lenders can send out an inspector, knock on the door and see who answers. If it’s a tenant not related to the borrower, it’s loan fraud and the note will be called in.

But if you are in a situation where you have a family member that can live in and occupy the property, it’s the best investment property loan around. And at the same time, junior begins building a solid credit profile.