Conventional Loan With Non-Occupant Co-Borrower
This BLOG On Conventional Loan With Non-Occupant Co-Borrower Was UPDATED And PUBLISHED On August 10th, 2019
Non-Occupant Co-Borrowers can be added on 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
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.
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
- 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 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:
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
- 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 faster response. Or email us at email@example.com.