Conventional Loan With Non-Occupant Co-Borrower

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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

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

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 insufficient 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 a non-occupant borrower’s 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 a 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 need to get 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]

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