How to Buy a Home for Aging Parents Using a Family Opportunity Mortgage

What if you could help an aging parent move closer to you without paying investment property rates?

In this episode of Real Estate Connections, Mary Foerster sits down with mortgage expert Gabe Whitmer to discuss one of the most underutilized mortgage programs available today: the Family Opportunity Mortgage. Together, they explore how adult children can purchase homes for aging parents or disabled family members while potentially qualifying for primary residence financing benefits.

The conversation also dives into the growing role of Accessory Dwelling Units (ADUs), multigenerational housing solutions, and creative financing options that can help families stay connected while preserving independence.

Whether you're caring for an aging parent, supporting a disabled family member, or exploring housing solutions that create flexibility and long-term value, this episode provides practical strategies and expert guidance.

In This Episode

• What a Family Opportunity Mortgage is
• How children can buy homes for aging parents
• Qualification requirements and common misconceptions
• Interest rate advantages versus investment properties
• Housing options for disabled family members
• ADU financing strategies
• Home equity loans, HELOCs, and construction financing
• Why ADUs are becoming a major housing solution
• Multigenerational housing trends
• Creating "raving fans" through exceptional service

Gabe Whitmer is a nationally recognized mortgage banker and team leader with First Bank Mortgage. Since entering the mortgage industry in 2015, Gabe has built one of the top-performing mortgage teams in the country, ranking among the Top 30 teams nationally and finishing #1 in Tennessee.

Known for his expertise in creative mortgage solutions, investment financing, and client education, Gabe is passionate about helping families navigate complex housing decisions. He leads a high-volume team while maintaining a client-first approach that has earned him a reputation for creating lifelong relationships and "raving fans."

Outside of work, Gabe enjoys spending time with his wife, daughter, son, and their newest addition, a baby who has quickly become the center of the family's world.

Connect with Gabe

Website:
 Whitmer Team Mortgage

Facebook:
 Mortgage Expert Facebook Page

This episode is intended for informational purposes only and does not constitute financial or investment advice.

Transcript

0:00

I had the pleasure of talking with Gabe Whitmer today, and it was a fast conversation about two issues of concern to our population that we focus on 45 to 65 year olds or thereabouts, and possibly that they have the care of a disabled parent or disabled relative. So Gabe, you get to talk about two things. How can you buy a house for a dependent parent, meaning that they might be disabled, or two, how can you use accessory dwelling units and fund accessory dwelling units to, one, help the needs of people in this age group? So the needs are the wants because you can do investment with it as well. So stand by and welcome Gabe Whitmer. Welcome to Real Estate Connections podcast. We're relationships open doors. I'm Mary Foerster and housing is a universal need. We are often thinking about our existing housing, our future housing, that possibly of family members. This is where you're going to hear the issues and the people who are working the issues every day. Please hit subscribe and like if you find this podcast helpful to you. Thank you. Well, welcome to Real Estate Connections podcast, where relationships open doors. Today we have Gabe Whitmer, a lender, a mortgage lender from First Bank. And First Bank Online is the component he's with First Bank Mortgage Online. And I know Gabe through a mutual connection, a man that has been on this podcast several times, Tim Robinson. And I love Tim Robinson, and Tim loves Gabe Whitmer. So therefore I love Gabe Whitmer. And I know that because we have a product with him and we've done some business with him. Welcome, Gabe. It's so good to see you. Hey, thanks, Mary. Happy Monday. Thanks for having me. Yes, and welcome from Chattanooga, Tennessee, where I've never been. Well, you will have to come visit. Let me know when you're here. Oh, thank you. I shall. I shall. Okay, great. So today we're talking about the homeowner or property owner or desired property owner, roughly age 45 to 65 people in what we call in the middle, right? People in the middle. And so and then the aspect of any of their kind of real estate interests that may coincide with having a dependent adult. In some cases, in many cases these days, we're seeing, of course, a dependent parent, but could be a sibling, could be whatever. So Gabe and I are going to talk about mortgage products that can be employed for issues around this population. So Gabe, I'm just going to turn it right over to you and you can take control. Yeah, no, thanks, Mary. I appreciate that. So they're one of my favorite mortgage guidelines is falls under it's called a family opportunity mortgage. And it's where you're able as a child, usually, and I've seen it of a 30 year old, I've seen it of a seven year old, you're able as a child to go provide housing for your elderly parent, which allows you to buy as a primary residence for them on their behalf. So I'm going to give an example. If my parents couldn't afford a home or had some sort of a disability that caused some limitations for them, I could buy a second primary home on their behalf, it'd be titled in my name, they could or couldn't be untitled up to the family. But it allows you to get the primary interest rate and allows you to get down payment flexibility. I want to tell a story first and a good use of it. I have a client who had a parent in St. Louis, they were becoming elderly, they had had a fall, they needed to move them within a mile or two for where they were at. And so as they were looking, mom and dad couldn't afford two homes. The home they were in in St. Louis needed some work. And so when they called me, they said, hey, I guess we're going to have to buy a home for my parents as an investment property. And I said, well, we can look at that. But have you ever heard of a family opportunity mortgage and kind of explained the guideline and how they could buy for an elderly parent? And so what they ended up doing is buying for the elderly parent as a primary residence, getting the primary interest rate. They were able to move the family from St. Louis, the parents from St. Louis to the new home. And then it gave them some flexibility to get the old home remodeled, listed, sold. And it really gave the family flexibility. But most of the time, Mary, if you call any mortgage lender and say, hey, I'm going to buy a property and it's going to be a couple miles down the road, nobody asked questions. Who's it for? Why are we doing this? Really, the first question I always ask is, hey, talk me through the short term, long term goals. And as clients say, oh, well, my mom is going to live in it. My father passed away and we need her close by due to her health. It automatically triggers, oh, I can do this and benefit them. I can do it as a primary residence for them. What I love is, what I didn't tell you about Gabe is he's an entrepreneur also. He started very early in college with his own business and moved on, scaled on from there. But Gabe, tell me the numbers. So you get the call. What does it mean for me, the child? What does it mean in terms of dollars and cents and today's rates? Could you kind of give us a sense? Great question. Yeah. So the difference between a primary interest rate and an investment interest rate, it's going to vary a little bit by credit score and down payment. But usually it's between three quarters to 1% of a rate difference. And so there's also some strategy in this where as a child, if I have a lot of my assets in stocks and retirement and not liquid down payment, it gives me the ability to do a lower down payment as well. So sometimes I'll have someone that says, well, can I put 5% down instead of 20% down? And the answer is yes, you can. Now, Mary, there are a couple requirements with it. There has to be a statement that the parents can't afford the home. And so that can be a little loose ended because a lot of times if the parents have a home to sell, that's very true as well. And so the other aspect is if for any reason it's for medical, a doctor can write a letter saying, hey, the mom or the dad or the parents cannot work and are limited. And so either way, the goal is to make sure it's not abused, but that really conventional mortgage doesn't want to decline someone from trying to help their parent. The guideline also works inverse. It can go two ways. So it can go for elderly parents. It can also go for a disabled child. So it kind of goes both routes. So if I have a 19 or 20 year old child with a disability that can't work, but they need housing, the guideline also allows you to buy a primary for them. So it's just not geared toward only elderly parents. It's usually a need on a disabled or a need on an elderly parent. And in terms of qualification, just the ability to move into a new property, into a new house, a new residence without having had to sell already your existing property, let's say in Florida or St. Louis, wherever they were, that also would fit within the guidelines. They couldn't afford a second mortgage. And I think about our basement. I was telling to my husband this morning,"Honey, if you put your seats to me, we have these conversations at this age, who is going to clean out that basement?" And so that I think alone would take six months. And so this timing sounds like it would provide several opportunities really, several. That's right. You mentioned that my grandma had a really big basement, really big house. My parents spent weekends, like upon weekends clearing out the basement. My grandma had lived through the Great Depression. And so canned goods from the 1970s had been expired, right? Just so much. And they were able to place her in a community first and then clear the house and sell it. It gives a lot of flexibility, takes some stress away. Now, the child purchasing the home does have to be able to qualify for the house. So from a debt to income standpoint, they have to be able to carry their primary home and the home. That's where their savings or their investments would help out, help them qualify? Yeah, that's right. Good. Oh, excellent. Excellent. So are you finding that you're able to offer this product more and more lately? Are you seeing a population that's going to benefit for them? Yeah, so I think a lot of it's knowledge. As I talk to realtors and financial planners, a lot of them just aren't aware. And I've heard many say, "Oh my gosh, I had a client six months ago, just go online, go to an online lender, buy something as an investment property." You see that a lot where the instinct is,"Well, I'm not going to live there, so I can't call it a primary residence." And so it's just not true. So we've seen it used. I've done this 12 years. I love mortgage. I enjoy geeking out on it. I enjoy finding ways to help people within the guidelines. And this is one that I've talked about for 12 years. It's not talked about enough. It's a really neat guideline. It's been around forever. But I would tell you it's simply knowledge. We've used it the same. My group, my direct team usually does about 600 loans a year. We probably do about 10 to 20 of these a year. Wonderful. Big believer in it. And again, it's just knowledge, just knowing it's an option that's out there. And the Family Opportunity Program has been around a while? Yeah, it's a Fannie Mae conventional product. Freddie Mac also is a professional product. And so, yeah, the official name is Family Opportunity Mortgage. I'll often simplify it as being able to buy for a disabled child or an elderly or disabled parent. It's the short version of what it does. But yeah, it has been around a lot longer than you would think. Terrific. The other day, I interviewed a legislator in Massachusetts who is the author of the Accessory Dwelling Unit legislation. It was part of a huge bill, Affordable Homes Act, for this state. Passed in 24. But regulations are not written until last year on ADUs. Very permissive, right? Very, very permissive. And what we run into, of course, is how the towns are interpreting. And I think largely the towns are doing pretty well and kind of making sure that they're conforming with the intent of the legislation. But it was surprise me, Gabe, is, and talking to Representative Aciero, he mentioned the disability community as being a strong proponent, advocate, beneficiary of accessory dwelling units. This state, I don't know about Tennessee, this state has preponderance of houses built before 1970. Lots of anticoams, lots of old stairs, et cetera, et cetera. So ADUs offer then the new architecture or flow plan. But the disability community, I really have to look into this. And you mentioned disability in terms of the benefits of this loan. Could we discuss a little bit about accessory dwelling units? Absolutely. Yeah. And I am a huge believer in accessory dwelling units, ADUs. They are a fantastic opportunity. And I'm going to kind of talk through a couple ideas. So most of what I see in kind of West Coast homes, California, you'll see New Mexico, they've been, ADUs have been around for a long time. And they've been used as families have grown, they've been used to support elderly parents, they've been able to support college age or kids coming out of college, but they've also become a really good source of revenue. So I have a close friend who owns a couple properties out West, owns a couple properties here in where he has homes, he has the main home, and then he has the accessory dwelling unit. Is it separate units or attached? Yeah. So one was a, from memory, one is a single family home and then it has like a single car garage that had been converted into an accessory dwelling unit. One had a true single home, two bedroom, one bath, accessory dwelling unit. And I have seen these as a long time as a great tool for investing. If you have a, and I actually own one, so I'll preface this, my wife and I own 10 properties. One of the homes we own, it's a brick rancher, or not brick rancher, it's a brick two story. It's a three bedroom, one bath, and then the single car garage had been converted years ago into a one bedroom, one bath, individual bathroom, individual room, and then kind of a kitchen living room area. And we rent it as one unit to the family. They have one of the daughters and her family lives in the ADU, and then they live in the main house. But we've always said, if they ever moved out, we would probably break it into two individual rentals and we would probably grow some more. So there's a lot of angles. One is, can it support someone in the family? And I think the answer is often yes. The other aspect is even if they move on from renting it to a student, one of the kids who's graduated or a disabled parent, and it's vacant, you can turn it into a rental and that could be a short term, a mid term, or a long term. And so it can be a great source of revenue. And so I'm a big believer in them. And I think you're seeing a lot of state of the law, I know Chattanooga specifically about a year and a half ago launched it and gave approval. And there were already a lot of them that had been approved through the years or maybe zoned legally to do it. But it's been nice to see a lot of ADU reform and ability. And I think we're going to talk about this, but one of the questions is always, how do you finance an ADU if you don't have one now? How do you finance a game? Yeah, well, I think there's a couple of scenarios and everybody's is going to be different. And what you're seeing, Mary is you have construction lending that is going to take a builder, they're going to come in and build the block foundation, they're going to build it like they would a house. But you now also have a lot of companies have figured out how to do, not manufactured, that's different modular where they site build the foundation and they bring in a unit, maybe a two bedroom, one bath that was built in a factory, but it's brought on, it's set down, you connect the plumbing, you connect the electrical. You would never know it wasn't built in the weather. And modular is are very different in manufactured. They're seen as site built homes fantastic. So you have companies doing that. So there's a couple of variations you could do a construction loan. So that's option one, you can always do some sort of a construction loan on the current home. I've had clients refinance and do a cash out refinance so they can pull out 100 or 150 or 200,000 to be able to build the accessory dwelling unit. Would they have to have all the money? Would they have to be able to do finance the whole project with that equity? I've seen them do that. Sometimes they'll use some of their cash, sometimes they'll use some equity. A client of mine just closed on a main home and an accessory dwelling unit and they're gun, like they have a main mortgage and they're coming back and they're going to do a home equity line of credit, which is a variable rate. It secures to the property as a second mortgage, it's interest only. And so they had held back some cash for the initial investment. And then they also were coming to open a home equity line to gain access to additional. So they could do both. They could do the home equity and refi and then they can do a HELOC for a part of it as well. And will they need a cash down payment also? Does that doesn't matter? It just depends on how much equity is in the current. How much equity? Okay, great. Yep, great question. And then you're also seeing out of some of these modular companies that have really kind of built some really unique business models. You're seeing that they're offering financing as almost like an installment. Sometimes you'll see like a 10 year breakdown where they have a local bank that is going to do a fixed 10 year payment. With a balloon? Not necessarily a balloon because it's not going to come due, but like almost like an auto loan would. Okay. Where an auto loan might go for 60 months or 72 months and it's paid off and you own it. You'll see this with pools. And now you're kind of seeing with modulators where they'll do an installment loan over a certain period of time. And they'll file what's called a UCC filing where there is a lien on the property, but it's not seen as a true second mortgage. Like solar? Exactly. Same thing. So solar pools, manufactured homes, or not manufactured homes, I'm sorry. Except redwelling units. Yeah, wonderful. Yeah. And so there's some really interesting ways to finance them. And I think what's fascinating about them is different municipal and different states are really, they have different guidance around them. So you do want to connect with your local zoning and approvals, but they're really, really great opportunity to, whether it's to support a family member or whether it's to have as an investment or have as even just a place for someone to stay when they're coming into town. They just open so many doors. Having an ADU, it's a really fantastic solution. I'm thinking also as you age in place and those stairs become onerous and the lift or elevators not really likely, you could actually move into a 900, in Massachusetts, the limit is 900 square feet, right? A 900 square foot accessory dwelling units, rent the big house or the bigger property and still have all your housing needs met. So there are many, many, many possibilities there. I know Airbnb is discouraged in terms of a number of communities. So we'll put that over to the side, but maybe some creative people will be doing Airbnb. But I love your attitude about the flexibility. And to go back to the important reason why we are seeing accessory dwelling unit legislation is because we have insufficient housing and so I know in different parts of the country, that's not necessarily true and it's tied a lot to the economy of the area, but the areas, many, and if not most urban areas are facing the shortage of affordable housing, affordable. That's right. And I think you just said on something really impactful, everything I'm seeing from mortgage economists is that we're going to continue, even though rates have gone up higher than people have wanted and they've kind of ebbed and flowed. We still have a national housing shortage over the next five, seven, 10 years. And ultimately, what happens is when rates go up, building slows down. And so that kind of exaggerates the longness of our lack of housing. So ADUs are absolutely a solution. I think you're also seeing multifamily really kind of have a purpose and come strongly back as not just it for investors. I have a client that has looking at a duplex or a triplex and they're planning to live in one and put one or two children and their families in the other. Wonderful. I'm not sure about the kids that need that, but that's a way, right? It's unique, right? And it's a way to still have family directly by, but not have to be in each other's space. That's been something I've seen a couple of times. Multigenerational. Bonsorship of courses on multifamily. And our pal in Maryland, Tim, he loves multifamilies. We're going to be hearing more from him about multifamilies for sure. I know we are. There's a man out in California, Washington, thatch Nguyen, and he pushes these ADUs. He used to be own 10 properties and you're set for life and your kids are going to go to school or whatever right now. He says buy five properties and put in five ADUs. And that's the new formula I'm hearing from out there for sure. It sounds like you're ahead of the game there. Well, I think sometimes people will say, well, Mary Gay, let's say it's not for a family member. Let's say it's for investing. Your property taxes go up a little bit with an ADU, but they're not double. You're using one electricity, you're using one water typically. You can break them into different bills if you need to, depending on the municipal. So you can really have the benefit of multifamily without some of the raise in the cost. And it's a fantastic tool to grow and have opportunity. Wonderful. Wow. This has been a rich conversation. Okay. Tell me about raving fans. I want to know about raving fans. Yeah. Yeah. So it's one of the books that when I first came into lending, I read and I took to heart. And the premise of the book, it has some corny aspects. It's been a bestseller. The heart of it just holds so true to me. If you have a bad experience, you're probably going to walk out of whatever place it is, the bank or the store or the restaurant and leave a bad review. And you might tell people about it as time goes on. If you have a good experience, you're probably not going to say anything because good experiences are kind of what you expect. You walk in, you got treated nicely and well, food was good or the place was nice to you. And if you have a great experience, you're probably going to go leave a positive review. And if somebody asks you about it, you'll talk about it. But a raving fan experience is meant where if you have such a great experience with somebody and you hear someone in a coffee shop next to you talking about what you had a great experience in that you inject yourself, that you go and you find ways to talk about it. And that's what a raving fan experience is. And our goal as a team has always been, you know, a lot of places do mortgage and a lot of places do mortgage well. What we really want is such a raving fan experience that people go out of their way to say, "Hey, you should use Gabe Whitmer on his team. You should talk to them about investing. You should talk to them about how you should buy this." And it's been a lot of joy to have people multi, you know, do alone for Grandma and Grandpa, do alone for Mom and Dad, do alone for kids and, you know, be able to,"I'm doing a loan that came in this morning and it's like the eighth loan I've done for this family up in Wisconsin." And so like it's just neat because I've gotten to know all of them and their friends and their family. But the goal is how do we get people to rave in our goal and our passion? And the book is a really easy read, highly recommend it. Title? Raving fans? The raving fan, yep. I believe Ken Blanchard is. I believe he's. Oh, that's right. Yep. You're very good. Well, you, I have become a raving fan because of one of your raving fans. And he's a big voice, a big voice in investing. So, which is really, really great. It has been amazing talking to you and thank you so much. And thank you for taking the time. I know it's a busy time for you, a very, very busy time. And I really appreciate it. But as other issues come up and you see, hey, Real Estate Connections podcast needs to look into this for this population, please, you know, drop a note or whatever, or come on the website and give me some advice. So that would be really awesome. I will. And Gabe's contact information is going to be in the show notes. So don't hesitate. And if you have any questions, don't hesitate to reach out to information or info at Real Estate Connections podcast. And we do like to make sure that tremendous professionals get get highlighted. And so don't hesitate to reach out and say, my professional in this area is awesome. And you need to talk with him or her. Gabe, have a great, great spring in Chattanooga. And I'm going to be down to visit you. Hey, I look forward to it. Thanks for having me, Mary. Thank you. Thank you so much for joining us today. And I hope you found this conversation useful to you and your real estate goals. You'll find the contact information for our guests in any links they recommend you have in the show notes. And should we be able to help you identify some strong real estate professionals in your area? Drop us a note at info at real estate connections podcast.com. Thanks again. And bye for now.