Can Non-Occupant Co-Borrower Purchase House?

Can Non-Occupant Co-Borrower Purchase House?

This BLOG On Can Non-Occupant Co-Borrower Purchase House Was UPDATED On March 3rd, 2018

The Federal Housing Administration (FHA) allows non-occupant co-borrower to be added to the main FHA mortgage borrower in order to qualify for FHA Home Loans.

  • The non-occupant co-borrower needs to be a family member and/or related to the borrower by blood, legal status, or marriage
  • The non-occupant co-borrower needs to qualify under FHA Guidelines
  • If the non-occupant co-borrower has a bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short sale, the same waiting period applies as the main borrower
  • The non-occupant co-borrower needs wait two years after a discharge date of Chapter 7 bankruptcy if he or she had filed a prior bankruptcy to qualify for FHA Loans
  • The non-occupant co-borrower needs to wait 3 years from the recorded date of foreclosure or deed in lieu of foreclosure if they had a prior foreclosure or deed in lieu of foreclosure to qualify for FHA Loans
  • The non-occupant co-borrower needs to wait three years from the HUD’s settlement date if they had a prior short sale to qualify for FHA Home Loans
  • The non-occupant co-borrower is not on title and only on the mortgage note

Can Non-Occupant Co-Borrower Purchase House Later

The answer to the question of Can Non-Occupant Co-Borrower Purchase House is yes. Non-occupant co-borrowers often wonder if by co-signing for a family member will affect their chances of buying a home of own later. .

  • By being a non-occupant co-borrower they can still qualify for a mortgage on their own with the debt that they co-signed not affecting them
  • How can this be?
  • Future mortgage lender will not take into account the co-signed mortgage liability if and only if they can provide them with the main borrower’s 12 months cancelled checks to the mortgage company main borrower has been making payments to
  • Although it is on credit report, the future mortgage lender will not count it as liability as long
  • This only applies if they can provide them with the cancelled checks from the main borrower they have cosigned
  • Unfortunately, if the person they have co-signed for has been late on their mortgage payments, it will affect credit scores negatively

Can Non-Occupant Co-Borrower Purchase House With No Credit Scores

Sometimes a FHA borrower will have a non-occupant co-borrower with no credit scores

  • Non-occupant co-borrowers with no credit scores are allowed only if they have 12 months rental verification and non-traditional credit tradelines
  • As long as the non-occupant co-borrower has twelve months cancelled checks paid to the landlord
  • Plus three non-traditional credit tradelines
  • Non-Traditional credit tradelines are creditors that do not report to the three major credit bureaus
    • Utility bills
    • Cell phone
    • Auto insurance
    • Tuition

What If Non-Occupant Co-Borrower Has Bad Credit?

Non-Occupant Co-Borrowers With Bad Credit

If the non-occupant co-borrower has bad credit, it can pose a problem. All lenders will take the lower borrowers middle credit scores and use that as the qualifying credit score.

  • To qualify for a FHA insured mortgage loan with only a 3.5% down payment, the minimum credit score required is 580
  • In the event if the non-occupant co-borrower has a credit score below 580, the loan originator can possibly help them boost their credit scores up so it surpasses the 580 mark
  • There are some quick fixes to boost up the credit scores and a rapid rescore can be done

Qualifying For Mortgage With Direct Lender With No Overlays

Home Buyers who need to qualify for mortgage with a national direct lender with no mortgage overlays can contact us at The Gustan Cho Team at Loan Cabin at 262-716-8151 or email us at gcho@loancabin.com. The Gustan Cho Team at USA Mortgage has zero lender overlays on FHA, VA, USDA, and Conventional Loans. USA Mortgage is also correspondent lenders on non-qm loans and bank statement loans for self employed borrowers. We are available 7 days a week, evenings, weekends, and holidays.

By Gustan Cho

www.gustancho.com

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