Parent’s can’t get prequalified for a loan but got 70k in savings

[Leonel Almagro]

Hi everyone,

My parents did not have financial knowledge so they never built up their credit. They want to invest their money and get a duplex or house hack. I currently own a house that is rented out and I just closed on another one. My question is how can I help them get a property. Can they gift me that money so I use it for a down payment. 

Thank you!

[Joseph Beilke]

@Leonel Almagro

It's almost impossible in this day and age to not have a some type of credit history.  I applaud them for being able to pay in cash for everything, that is a goal of mine.  

The way you help them is to build a credit history. I would personally go with them to a credit union or bank and have them ask for a self secured credit card using a very small amount of that 70K, I''m thinking a 5K credit line. Do this at 2 or 3 different banks. Over them next 3 months they buy everything with that card, and I mean every thing from Food to gas to paying the water bill. Pay 95% of the bill each month and carry a very small balance. Once they have recorded 3 to months of credit history from 2 or more sources, they will have a credit score jump. Hopefully, that jump will be enough to pull the money for the self secure card back out and they pay off the small balance. I know this is not a quick fix but it will set them up moving forward. Second option is to co-sign with them on a loan, using your credit to help them get into a property while over time they make the payments and both of your credit history builds. This could hurt you having more loans out, if you are looking for more properties yourself and effect your DTI ratio.

[Theresa Harris]

Are you willing to co-sign on a mortgage for them?  Have them talk to the bank as they will have a credit score, it is just a matter of what it is.  Have them get one credit card and use it for a few regular purchases and pay the balance off in full each month.  The loan officer at the bank should also be able to tell them how to increase their credit score.

[Eliott Elias]

They can use non QM mortgages like DSCR to buy a property. You can also create an entity with both of you as members and invest the money together

[Lumi Ispas]

@Leonel Almagro, With FHA they can buy by showing that they've been paying on time their utility bills, phone bill, etc.

Also, you can add them on your credit cards for a fast way to show credit. 

Good luck!

[Jonathan Soto]

i 2nd the dscr loan. which state are you looking. maybe i can help you in the right direction

[Leonel Almagro]

Thank you all for the responses. @Jonathan Soto they are currently in NJ.

[Jonathan Soto]

Quote from @Leonel Almagro:

Thank you all for the responses. @Jonathan Soto they are currently in NJ.

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