What Is A Non-Occupant Co-Borrower?
Home buyers who cannot provide enough documented income cannot qualify for a mortgage loan no matter how high their credit scores are. You can get a mortgage loan with sufficient documented income and lower credit scores but you cannot get a mortgage loan with perfect credit but not enough documented income. Many home buyers who are self employed or write off a lot of expenses on their tax returns normally have issues with providing documented income and qualifying for a mortgage loan. There are caps on debt to income ratios depending on the mortgage loan program you choose. For example, debt to income ratio caps on conventional loan programs are generally capped at 45% whereas debt to income ratios on FHA loan programs are capped at 56.9%. USDA loan programs are capped at 41% while VA loans you can go as high as 60% DTI. Jumbo mortgage loan programs cap the debt to income ratios between 40% and 45% depending on the jumbo mortgage lender. A non-occupant co-borrower is a person who is related to the main mortgage loan borrower who is basically a co-signer on the loan where the non-occupant co-borrower income can be used to qualify for the mortgage loan borrower’s income. The non-occupant co-borrower will go on the mortgage note but the non-occupant co-borrower will not go on title to the property. Home buyers who make cash and do not declare income or self employed borrowers who write off a lot of expenses normally need non-occupant co-borrowers in order to qualify for a mortgage loan.
FHA Loan Allows Non-Occupant Co-Borrowers
FHA loan programs allow non-occupant co-borrowers for home buyers who have little or no income for income qualification so they can meet the necessary debt to income ratios. Actually, FHA will allow more than one non-occupant co-borrowers. Non-occupant co-borrowers normally need to be relatives who are related by blood, marriage, or law. A son, parent, uncle, aunt, grandchild, son in law, daughter in law, father in law, mother in law, brother in law, sister in law can all be non-occupant co-borrowers as long as they can provide documentation of the relationship.
Can I Get Conventional Loan With Non-occupant Co-Borrower?
Many home buyers with excellent credit but with not sufficient income to qualify for a mortgage loan prefer to get a conventional loan instead of a FHA loan due to the hefty pricey FHA mortgage insurance premium. However, Fannie Mae does not allow non-occupant co-borrowers on conventional loan. If you want to get a conventional loan with non-occupant co-borrower, you can qualify with a Freddie Mac conventional loan. The answer to the question of whether or not you can get a conventional loan with non-occupant co-borrower, the answer is yes with a Freddie Mac conventional loan mortgage lender. Freddie Mac allows home buyers seeking a conventional loan with non-occupant co-borrower as long as both borrowers meet Freddie Mac’s mortgage lending guidelines with regards to credit, income, and debt to income ratios. The main borrower and non-occupant co-borrower needs to get an approve/eligible per LP FINDINGS, which is Freddie Mac’s Automated Underwriting System. Not all mortgage lenders are Freddie Mac approved lenders. If you are seeking a conventional loan with non-occupant co-borrower, please contact me at 262-716-8151 or at www.gustancho.com.
Related> Does a mortgage co-signer also need to own the home?
Related> Non-occupied co-borrower on a Fannie Mae loan