Qualifying Mortgage Borrowers And Co-Borrowers For Loan Approval

Qualifying Mortgage Borrowers And Co-Borrowers For Loan Approval

This BLOG On Qualifying Mortgage Borrowers And Co-Borrowers For Loan Approval Was UPDATED On January 4th, 2019

All mortgage lenders qualify mortgage borrowers and co-borrowers in similar ways:

  • All Mortgage Borrowers and Co-Borrowers need to have a valid social security number
  • Two years employment history: Gaps in employment is allowed
  • Two years residential history
  • All title needs to be held in the borrowers name and cannot be held in partnership, corporation, real estate syndication, trust, or shared equity transaction

Non Permanent Resident Aliens As Mortgage Borrowers

Non-Permanent Resident Aliens can qualify as mortgage borrowers and co-borrowers.

Here is what they will qualify for:

  • Primary Residence Only
  • Borrowers must be eligible to be employed and work in the United States
  • Needs proof of valid social security number
  • Proof of residency and employment status through the United States Bureau of Citizenship and Immigration Services
  • Copy of Employment Authorization Card I-688B
  • This card has an expiration date: Cannot be expired
  • Copy of social security card is not acceptable as proof of valid work status
  • If the card is set to expire in less than 12 months, then provide copy of previous expired cards to show proof that the borrower has history of steady renewals of card

Permanent Resident Aliens As Mortgage Borrowers

Permanent Resident Aliens as borrowers are treated the same as United States Citizens.

Need to provide the following:

Non Occupying Co-Borrowers As Mortgage Borrowers

Some loan programs allow for non-occupant co-borrowers to be added on to the mortgage loan.

  • Cases where co-borrowers need to be added is when the borrower themselves do not qualify with income
  • Additional income is needed to meet debt to income ratio requirements so co-borrowers and non-occupant co-borrowers are added to the the loan
  • All loan programs allow for spouses to be added on as co-borrowers
  • FHA allows non-occupant co-borrowers to be added to the FHA Loan
  • Freddie Mac allows for non-occupant co-borrowers to be added on conventional loans
  • VA only allows married spouses to be added on as co-borrowers
  • Non-Occupant co-borrowers cannot be added on cash-out refinance mortgage transactions
  • Non-Occupant co-borrowers need to be related to borrower by blood, marriage, or law on FHA Loans

Non-Borrowing Spouse Guidelines On Community Property States

Home Buyers who are purchasing a home in community property states need to consider that the the non-borrowing spouse’s debt is included in the calculation of the borrower’s debt to income ration. The credit report and debts of the non-borrowing spouse is considered.

There are nine community property states:

  1. Arizona
  2. California
  3. Idaho
  4. Louisiana
  5. Nevada
  6. New Mexico
  7. Texas
  8. Washington
  9. Wisconsin

Identity Of Interest Transactions For Mortgage Borrowers

Identity Of Interest Transactions are real estate transactions among and/or between family members. Also real estate transactions between business partners or other close arms length business transactions are called identity of interest transactions. All identity of interest transactions have restrictions of having maximum loan to value caps of 85% LTV.

There are exceptions of going over the 85% LTV caps if the following applies:

  • Family member purchasing from another family member’s principal main owner occupant residence

What Is Definition Of Family Member In Mortgage Terminology

The term family member in mortgage terminology is the following:

  • Children
  • Parent
  • Grandparent (Can be biological, foster, step)
  • Sister, step-sister
  • Brother, step-brother
  • Son, daughter, step-son, step-daughter
  • Adopted son and daughters
  • Foster children

Note To Mortgage Borrowers

A CAIVRS screening by a third party public search company is done on all mortgage borrowers. This does not apply for non-borrowing spouses. Any debt to government such as federal student loans in default will disqualify borrowers from government loans.

Gustan Cho NMLS ID # 873293

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