Multiple Non-Occupant Co-Borrowers FHA Mortgage Guidelines

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This BLOG On Multiple Non-Occupant Co-Borrowers FHA Mortgage Guidelines Was UPDATED And PUBLISHED On May 20th, 2020

What are the FHA mortgage guidelines

The Federal Housing Administration (FHA) allows borrowers to add non-occupant co-borrowers if the main do not qualify with income.

  • Adding non-occupant co-borrowers is only allowed with FHA loans
  • Fannie Mae Conventional Loans does not allow non-occupant co-borrowers
  • Freddie Mac does allow non-occupant co-borrowers to be added
  • VA Loans does not allow it
  • VA only allows married spouses to be added as co-borrowers

Non-occupant co-borrowers need to be family members or relatives and be associated to main borrowers by blood, marriage, or law.

Eligible Multiple Non-Occupant Co-Borrowers

For example the following would be eligible non-occupant co-borrowers on FHA Loans:

  • parents
  • step parents
  • brothers
  • sisters
  • aunts
  • uncles
  • grandparents
  • children
  • step children

Be added as non-occupant co-borrowers on FHA Loans:

  • Multiple non-occupant co-borrowers will go on the mortgage loan but not on the title to the property

Non-occupant co-borrower will need to provide all income, liability, and asset information to the mortgage lender.

Multiple Non-Occupant Co-Borrowers Qualifications

What are the qualifications of many non-roommates

To be qualify as non-occupant co-borrowers for FHA Loans, borrowers needs to be a family member and/or relative to the mortgage loan borrower related by blood, marriage, or law. Adding on non-occupant co-borrowers who is related by blood, law, marriage enables home buyers to qualify for FHA Loans with 3.5% down payment:

  • In order to qualify as non-occupant co-borrowers, they need income
  • For example, if the non-occupant co-borrower is currently living with family and/or friends and is living rent free, that person can qualify as co-borrowers
  • HUD, the parent of FHA, will allow non-relatives to be non-occupant co-borrowers

However, if non-occupant co-borrowers are not related to main borrowers by law, blood, marriage, then 15% down payment is required.

Cases When AUS Conditions Verification Of Rent

Rental verification is only valid if the non-occupied co-borrower pays their landlord with a check every month and provide 12 months cancelled checks paid to the landlord. There are instances where the Automated Underwriting System Findings may condition verification of rent for borrowers and/or co-borrowers

  • Bank wires from the non-occupant co-borrower to the landlord is allowed as long as the non-occupant co-borrower can provide 12 months bank statements of funds being withdrawn from their bank account to the landlord’s bank accounts
  • A verification of rent, also known as a VOR, is required as well which is a statement signed by the landlord attesting that the tenant has been paying rent timely in the past 12 months with no late payments
  • If the non-occupant co-borrower is renting their home or apartment from a registered property management company, a letter from the manager is sufficient as proof of verification of rent

VOR Form completed and signed by property manager can be used in lieu of providing cancelled checks and/or bank statements.

Will Being A Non-Occupant Co-Borrower Affect In Getting A New Mortgage In The Future?

Will Being A Non-Occupant Co-Borrower Affect In Getting A New Mortgage In The Future?

Being a non-occupant co-borrower will not affect the non-occupant co-borrower with their debt to income ratios after 12 months.

For example, here is case scenario:

  • If the non-occupant co-borrower is a renter
  • wants to qualify for a mortgage loan after one year
  • the non-occupant co-borrower needs to provide 12 months cancelled checks from main borrower proving that they not responsible for the mortgage payment
  • Doing so the debt of being non-occupant co-borrower will not count and be exempt 

The risk that arises from being a non-occupant co-borrower is that if main borrower is late on their mortgage payment, it will affect their credit payment history and credit scores on their credit report.

Can Borrower Have Multiple Non-Occupant Co-Borrowers?

The Federal Housing Administration allows for more than one non-occupant co-borrowers to be added to main borrower’s FHA Loan to qualify for income.

  • Borrowers can have both parents added as non-occupant co-borrowers to qualify for income
  • Or they can have a brother and/or sister as well as their spouse as non occupant co-borrowers

Home Buyers who need to qualify for mortgage with a five star national direct lender with no mortgage overlays on government and conventional loans can contact us at GCA Mortgage Group at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates has zero lender overlays on FHA Loans, VA Mortgages, USDA Home Loans, and Conventional Loans. GCA Mortgage Group is also correspondent lenders on non-QM loans and bank statement mortgage loans for self employed borrowers.

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