Conventional Loan With Non-Occupant Co-Borrower

This Article Is About Conventional Loan With Non-Occupant Co-Borrower 

Non-Occupant Co-Borrowers can be added to Conventional and FHA Loans.

  • The United States Department Of Veteran Affairs does not allow non-occupant co-borrowers on VA Home Loans
  • Only married spouses of veteran borrowers can be added as a co-borrower
  • USDA does not allow non-occupant co-borrowers
  • Both Fannie Mae and Freddie Mac allow multiple non-occupant co-borrowers to be added to the main borrower
  • Both borrowers and co-borrowers need to meet mortgage guidelines
  • The middle credit score of the lower borrower/non-occupant co-borrowers is used for credit score qualification

In this article, we will cover and discuss Conventional Loan With Non-Occupant Co-Borrower Guidelines.

When Are Co-Borrowers Needed

When Are Co-Borrowers Needed

Homebuyers who cannot provide enough documented income cannot qualify for a mortgage loan no matter how high their credit scores are.

  • Borrowers can get a mortgage loan with sufficient documented income and lower credit scores
  • But borrowers cannot qualify for home loans 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.

Debt To Income Ratios

There are caps on debt to income ratios depending on the mortgage program:

  • For example, debt to income ratio caps on conventional loan programs are generally capped at 50%
  • FHA Loans debt to income ratios are capped at 56.9% to get an approve/eligible per Automated Underwriting System Approval
  • USDA loan programs are capped at 41%
  • VA loans have no credit score requirements no debt to income ratio caps
  • I have gotten AUS FINDINGS Approval on VA Loans with higher than 60% DTI
  • Jumbo mortgage loan programs cap the debt to income ratios between 40% and 45% depending on the lender
  • A non-occupant co-borrower is a person who is related to the main borrower
  • A non-occupant co-borrower income can be used to qualify on conforming loans
  • 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

Homebuyers 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 mortgages.

Conventional Loan With Non-Occupant Co-Borrower Versus FHA Loans

FHA Loan Allows Non-Occupant Co-Borrowers

FHA loan programs allow non-occupant co-borrowers for homebuyers 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
  • The main borrower can have zero income and use non-occupant co-borrowers income

Non-occupant co-borrowers normally need to be relatives who are related by blood, marriage, or law

The following folks can qualify to be non-occupant co-borrowers:

  • 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

If non-occupant co-borrowers are not related to the main borrower by blood, marriage, law, then 25% down payment is required:

Conventional Loan With Non-Occupant Co-Borrower: 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 an FHA loan due to the hefty pricey FHA MIP.

  • Fannie Mae does did not allow non-occupant co-borrowers but now it does
  • Both Fannie Mae and Freddie Mac allow non-occupant co-borrowers
  • Non-Occupant Co-Borrowers do not have to be relatives related by law, marriage, blood on conforming loans
  • There can be multiple non-occupant co-borrowers on conventional loans
  • Fannie Mae does not allow the main borrower with zero income and has non-occupant borrowers income only
  • The main borrower needs to show some sort of qualified income and cannot have zero income
  • Freddie Mac does allow zero income by the main borrower and non-occupant co-borrowers income can be used
  • 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 and Freddie Mac
  • Both main borrower and all non-occupant co-borrowers need to meet Fannie Mae and/or 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 DU and/or  LP FINDINGS
  • Not all mortgage lenders are Freddie Mac approved lenders

Conventional home buyers or homeowners who need to qualify for conventional loans with a direct lender with no mortgage overlays on government and/or conventional loans, please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or at text us for a faster response. Or email us at [email protected]

Related> Loan prospector documentation matrix

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