Does buying a house affect financial aid?

Paying for College
1

Hello,

My mom wants to purchase a house, but I’m afraid it will affect my financial aid which covers my community college tuition of $2,000. My mom had savings of $30,000 and she wants to use that for cash down payment. Rent is rising, and mortage is around $1,800 for an inexpensive home. Our monthly rent is around $1,700.

My EFC is 0, my advisor told me to put 0 in savings. I don’t know if thats illegal or anything like that, but I’ve read in this forum of a girl’s mom who had 400k in savings but has an EFC of 0. I know my moms savings is a little bit, but I want to know if we can purchase a home without it affecting my financial aid?

What if I co sign with my mother the house?

Thank you!

2

First of all, how old are you?

Second- what is your mom’s income and is there a second parent in the picture?

And how many assets do you have in your own name, i.e. bank account?

3

I am 19 years old, second year in community college. My mom makes around 10k year, and I work as well making around 10k a year. I try to work 20 hrs minimum weekly (my college advisor told me if I worked a lot financial aid my reduce or take away the help). My mother receives child support for my brothers, around 400 monthly. My mom claims me on her taxes, and I am dependent on her. I have 2 bank accounts. One is a high yield savings account for savings and to receive interest, I have around 5k there, I have not reported that to FAFSA as my advisor told me isn’t necessary. I have credit cards from different companies, I don’t know if that counts.

4

Don’t cosign the loan.

5

It wasn’t necessary to report it only if FAFSA didn’t ask about your assets.

6

Do not cosign that loan!
Not to be a Debbie Downer but: What if your Mom loses her job? What if your mom becomes ill!
What if you both have to continue to work yourselves ragged, and you miss time to study? You should not be taking on additional debt so early in your college career.

7

Do NOT NOT NOT co-sign a loan.

Your mom buying a house for you all to live in will not affect your college financial aid. Primary homes are not even mentioned on the FAFSA form.

YOU having this house in your name WILL possibly affect need based aid.

Regarding your $5000 savings…you only don’t report that IF your family qualifies for the simplified needs test or auto $0 EFC. Is that the case?

8

How does your mom pay $1700 a month rent if she only earns $10k per year and received $400 month child support?

9

How will your mom pay $1800 in mortgage payments with a $10,000 income? That’s $20,000 a year in mortgage payments.

How will your mom qualify for a mortgage that means spending more of her income on a mortgage payment than her annual earnings??

10

Renting is not the same as owning a home.

You have to pay property taxes, homeowners insurance and pay for repairs if you own your home.

That will cost more than the mortgage payment alone.

I don’t think that is a good idea right now with your mom’s limited income.

Find out if you qualify for auto zero EFC or simplified needs. If not your assets and some of your mom’s assets (after the asset protection allowance), and your income might be counted.

11

But even if your assets ARE counted…your primary residence would not be included in that on the FAFSA.

The $30,000 in savings your mom has might be close to or below the asset protection allowance for the FAFSA.

12

I appreciate your reply. Why shouldn’t I cosign with my mom? How would it affect my financial aid?

13

I work as well making around 800 a month.

14

My mom works for the school, but during the summer she has another job but that pays cash. And I believe she can’t claim that for the mortgage as she needs proof by pay stub. But me and my brother work. I understand where your coming from. I know if we’d go to a real estate agent they’ll say the same exact thing.

15

What is the simplified need test?

16

If YOU co-sign the mortgage, and YOU are part owner of the house…than your part will be YOUR asset. Students do NOT have an asset protection allowance.

I think you are putting the cart before the horse. No mortgage company is going to grant a mortgage that has payments in excess of annual income…sorry…that is not going to happen.

Your mom needs to see if she would even qualify for a mortgage.

Regardless…don’t get involved in this purchase…you have precious little of your own income…and it would be much wiser to spend it on your college education, than to become burdened with a mortgage payment.

In addition,.,IF…and I mean IF the bank views you as a qualified mortgage cosigner…if your mom cannot pay YOU will be responsible for making the full payments. Not a good idea.