If you're planning to have a parent, grandparent or adult child live with you, you have more financing options than most people realize. You can buy a larger home with a main-floor suite, buy a home that already has an accessory dwelling unit (ADU), add a suite or ADU to the home you already own, or, in some cases, buy a separate home for a parent with primary residence financing. The best path depends on who's paying, who's living where, and whose name goes on the loan and the deed.
I'm Paul Mattos, a mortgage broker in Fort Mill, SC, licensed in North and South Carolina. More of the families I work with are planning for multigenerational living, whether it's for caregiving, child care help or simply sharing costs. Here's how the financing side works.
Four Ways to Make Room for Family
1. Buy a bigger home with a guest or in-law suite
This is the most common route. Many newer homes around Charlotte, Fort Mill, Waxhaw and Lake Norman offer a main-floor bedroom suite, a bonus room over the garage or a finished basement. A standard conventional, FHA, VA or jumbo loan works the same way it would for any home.
What to look for:
A full bedroom and bathroom on the main floor
Wider doorways and a step-free entry if mobility matters
A separate entrance or a second living area for privacy
Room for a small kitchenette, if local rules allow it
2. Buy a home with an existing ADU
An ADU is a small, separate living space on the same lot, like a garage apartment, a backyard cottage or a basement apartment with its own entrance. Homes with ADUs give everyone more privacy and independence.
On a conventional loan, Fannie Mae now lets you count rental income from one ADU on a single-unit primary residence to help you qualify, up to 30% of your total qualifying income, on a purchase or a limited cash-out refinance. That can help if a family member will pay rent, or if you'll rent the ADU out later. Other loan programs have their own rules. Fannie Mae explains its rental income rules in B3-3.8-01, Rental Income.
The appraisal matters with ADUs. The appraiser needs comparable homes with similar units, and the ADU has to meet local zoning and permit rules. An unpermitted ADU can cause problems with financing, insurance and resale.
3. Add a suite or ADU to the home you already own
If you love your current home, you may not need to move. You can finance an addition, a garage conversion or a backyard ADU with:
A HELOC or home equity loan, which lets you keep your current first mortgage. See my HELOC page.
A renovation loan, which can base the loan amount on the home's value after the project is finished. See my renovation loans page.
A cash-out refinance, which replaces your mortgage with a larger one. It usually makes the most sense if your current rate isn't much lower than today's rates.
For help deciding between staying and moving, read Should I sell my house or refinance?
4. Buy a separate home for a parent
If your parent wants their own place nearby, conventional guidelines can let you buy a home for a parent who can't work or doesn't have enough income to qualify on their own, and have it treated as a primary residence rather than an investment property. This is sometimes called a "family opportunity" mortgage. Primary residence financing usually means a lower down payment and better pricing than an investment property loan.
You'll still need to qualify for both your own housing costs and the new loan, and the lender will need documentation of how the home will be used. Not every lender handles these well, so ask before you start shopping.
Building an ADU in Charlotte
If you're in Charlotte, the city allows one ADU per lot on most single-family and duplex lots zoned N1 and N2, as long as it stays under the same ownership as the main home. You'll need a city land development permit first, then a building permit from Mecklenburg County, a new address and a certificate of occupancy before anyone can live there. The city's standards currently cover detached ADUs, and attached units need a conversation with the city's ADU team. See the City of Charlotte's ADU page for current rules.
Rules are different in every town and county around Charlotte, including Fort Mill, Rock Hill, Indian Land, Waxhaw, Huntersville and the rest of the region. HOAs can also restrict ADUs. Check with the local planning department and your HOA before you buy a home with ADU plans or start a project.
Who Should Be on the Loan and the Deed?
This is where multigenerational purchases need the most planning. Common setups include:
You buy, and your parent lives with you. You're the borrower and owner. Your parent may contribute toward expenses or pay rent.
Your parent is a co-borrower. Their income, like Social Security, a pension or retirement withdrawals, can help you qualify. They're also responsible for the loan.
Your parent gives you a gift toward the down payment. Parents are an acceptable gift source on most programs, with a gift letter and proof of the transfer.
Your parent sells their home and puts the proceeds toward yours. This can be a gift or make them a co-owner, which affects title and taxes.
Adding a parent to title, or having them contribute money, can affect estate planning, taxes and eligibility for benefits like Medicaid. Talk with an elder law or real estate attorney before you decide how to hold title. For more on title and co-borrowing, read buying a home with a partner or spouse, and for documenting a parent's contribution, see moving money before closing.
Property Taxes for Older Homeowners
If your parent will own the home, or part of it, ask about property tax relief for older homeowners. North Carolina and South Carolina both offer homestead programs for qualifying homeowners who are 65 or older or disabled, with rules on age, income and residency. In South Carolina, the 4% primary residence assessment applies only to the owner's legal residence. Check with the county tax office for current eligibility, and see North Carolina vs. South Carolina property taxes for how the two states differ.
New Construction With a Multigenerational Floor Plan
Several builders around Charlotte offer floor plans with a main-floor suite, a second primary suite or an attached living space with its own entrance. If you're buying new construction, ask the builder which plans are designed for multigenerational living and what can be added as an option. My new construction loans page covers financing for to-be-built homes, and my guide to mortgage rate locks explains how to time your lock on a longer build.
Questions to Answer Before You Shop
Will your family member live in the same house, in an ADU or in a separate home?
Will they contribute money, and if so, as a gift, rent or as a co-owner?
Do you need their income to qualify?
What accessibility features do you need now, and later?
Do local zoning rules and the HOA allow the setup you want?
Have you talked with an attorney about title, estate planning and benefits?
Frequently Asked Questions
Can I buy a house for my elderly parent?
Often, yes. Conventional guidelines can let you buy a home for a parent who can't qualify on their own and have it treated as a primary residence, which usually means better terms than an investment property loan. You'll need to qualify for both your housing costs and the new loan.
Can my parent's income help me qualify?
If your parent is a co-borrower on the loan, their documented income, such as Social Security, a pension or retirement distributions, can usually count. They'll also be responsible for the loan.
Can ADU rent help me qualify for a mortgage?
On a conventional loan, Fannie Mae allows rental income from one ADU on a single-unit primary residence, up to 30% of your total qualifying income, on purchases and limited cash-out refinances. Other programs have their own rules.
Can I build an ADU in Charlotte?
Charlotte allows one ADU per lot on most single-family and duplex lots zoned N1 and N2, with city and county permits. Rules differ in surrounding towns, and HOAs may restrict them, so check before you plan a project.
How do I pay to add an in-law suite?
Common options include a HELOC or home equity loan, a renovation loan, or a cash-out refinance. If you have a low first mortgage rate, a HELOC or home equity loan often lets you keep it.
Should my parent go on the deed?
It depends on your goals. Adding a parent to title can affect estate planning, taxes and benefits like Medicaid, so talk with an elder law or real estate attorney first.
Let's Plan the Right Setup for Your Family
Whether you're buying a home with room for a parent, adding a suite to your current home or buying a separate home nearby, I'll walk you through the financing options side by side so you can choose what fits your family. As a mortgage broker, I compare loan options from multiple wholesale lenders, which helps when a purchase involves more than one household. Schedule a consultation or start your application.
Paul Mattos
Mortgage Broker | Refine Mortgage
Carolina Home Financing
NMLS# 2339069 | Licensed in NC and SC
Call or text: 980-221-4959
Email: paulm@refinemortgage.net
Refine Mortgage Inc. | NMLS# 2417960 | Equal Housing Lender. This article provides general educational information and is not a commitment to lend, a rate quote, or tax or legal advice. Zoning, ADU, property tax and loan program rules vary by location and lender and can change. Financing is subject to credit, income, assets, appraisal, title and underwriting requirements. Not all applicants will qualify.
