So I live with my mom (divorced) and we are on Section 8 housing, renting out an apartment.
The rent has been rising to a point of expense that we’ve now reached price point where it would be better if she just bought a house on mortgage and make payments towards a house that we keep instead of paying rent.
That said, how would this affect our FAFSA. We may get a family friend in to pitch in with payments on the mortgage too, would that affect FAFSA in anyway?
I do not have a job (but am working on getting a part time gig) and don’t pay rent either, but I am on my last year at Community College and will be applying to universities soon.
So the main question is, how would my mom buying a house on mortgage affect my FAFSA?
Sorry if I did not include any crucial details, am new in this stuff so I can provide any extra details for an answer as needed.
I would like to also mention I already searched the forums but they always seem to cover either the student themselves buying the house or the parents already having the money and paying the house whole as a situation, rather than my specific situation.
How is a friend providing money to help with a mortgage income? If the friend’s payments were in exchange for living in the house, sure, but we haven’t heard that (yet). Otherwise, it sounds like a gift.
You are purchasing a house
Your friend who is helping you with the down payment will be living in the house and paying rent to live in the house.
You are single and have no children
you are filing your FAFSA as your primary residence is living with Parents (who will be living in the house with you)
Any ‘rent’ paid by your friend is income and must be reported on the fafsa.
Ok…if your friend pays rent to your parent…than that IS included as income on the fafsa, and depending on the amount, it very well could affect your need based aid.
So then, the only thing that would affect my FAFSA would be the friend’s extra income? Were she to buy a mortgaged house with cheaper payments, then, it would not affect my FAFSA (assuming the same conditions mentioned earlier)?
There are too many variables to give you a definitive answer here. Will your mother be putting a downpayment on the house she buys? That will potentially decrease her FAFSA reportable assets. If a monthly mortgage payment will be lower for a house she owns than current rent payments, that may increase her FAFSA reportable assets. However, as a property owner your mother will have property insurance and property tax payments that she is responsible for, which may offset any other housing cost savings. And as pointed out, any rent payments your mother receives will need to be added to her reportable income. Really good estimates of what all these numbers would be are needed in order to give you any idea of how your FAFSA EFC might change.
To clarify, my mom is a first time home buyer, and will not be putting down a down payment, she will be renting out a room to make the mortgage payment. She’s looking for a house between $250,000-300,000 and makes an average of $30,000/yr. My mom has no assets, other then the home she would be hypothetically buying.
So she’ll rent out a room at ~$300-400/month, which would bring her about $3,600-4,800 extra income, which would mean she would be getting about ~36,000 a year
To add, I also have a sister who will be just starting college in about a year, and will also get financial aid when she starts (already applied, and qualified will start college Fall-2018). I also have 2 younger siblings in public school who aren’t college age yet but will be in about 5-7 years.
I hope this is enough detail. Would there be any other variables that could help out? Would me and my oldest sister risk our financial aid assistance? How would this affect my two younger siblings in the future?
is your mom’s $30,000 income before taxes are taken out…or after?
The $4500 or so of extra income might affect your EFC…but with a family of five…I would think it would still be low.
What did your sister get this year? What was her EFC? Did she get a full Pell Grant?
Keep in mind…every college awards need based aid different,y. The college you end up attending might not be as generous as your sisters.
Is your mom sure she can afford the mortgage, taxes, insurance, and mantennce on a $250,000-$300,000 house? The mortgage on that will be in the $1200-$1500 a month range for a thirty year mortgage…but she will need to add taxes to that…and insurance…which could add a sizable amount to that each month.
Just asking…because it’s not all that easy and cheap to finance and own a house…and the actual mortgage payment is only a portion.
Let’s say your mother’s annual income including the potential rent is $36,000 after taxes and other deductions, so she takes home $3,000/month. If she buys a $250,000 home with a 30 year mortgage at a fixed rate of 4% and no down payment, her monthly mortgage payments for just principal and interest will be $1,193. Figure property taxes are $4,000/year and property insurance is $1,000/year, so those costs are $417/month. Your mother’s monthly disposable income after housing costs is now $1,390/month. Also consider that she is now responible for maintenance and upkeep costs of your residence, something that the landlord is responsible for when you are renting. How much is the monthly rent that she is paying now? I’m finding it hard to understand how buying a $250,000 to $300,000 house with no down payment on take home pay of $3,000 (best case scenario) makes any sense, with one kid in college, another starting in about a year, and two more who could be in college in 5 to 7 years.
@Belknap Yeah no I get that it doesn’t make “financial” sense given the details. They’re not supposed to be precise and were provided to help make a rough guess. It’s just a question regarding, with our rent payment being increased more, should she buy a house at some point in the future at yey-amount-of-dollars, how would it affect EFC/FAFSA (assuming she would make the same amount of payments towards the house as she currently does with the apartment we currently live in).
@stenets if this is hypothetical information…then it is VERY hard to give you advice. VERY.
Could you at least answer these questions?
And here is why…if your mom has substantial,savings she is now planning to,use as a downplayment on a house those would,typically be an asset. BUT…if your sister qualified for an auto $0 EFC with income less than $30,000, that could change if the income rises…because the assets in the bank would then be counted. With auto $0 they are not.
Of course, if she uses those assets to purchase a house…your primary residence would not be counted on the FAFSA…but any rent would,be added income.
Keep in mind…every college awards need based aid differently. The college you end up attending might not be as generous as your sisters.
And remember also…when your sister graduates, your EFC will increase.
If your family income is below the asset reporting requirement, then your hypothetical scenario would not help your financial aid at all but the increased income from rent may potentially lower your aid. After all, it is not likely for anyone to get a mortgage loan of near 10 times of annual income.