Non Occupied Co Borrowers With FHA Loans To Qualify Income

Non Occupied Co Borrowers With FHA Loans Explained:

The Federal Housing Administration allows home buyers who do not qualify for FHA loans due to high debt to income ratio or lack of income to have a non occupied co borrowers with FHA Loans to be added to the FHA loan in order to qualify.

  • By adding the non occupied co borrower with FHA Loans, this gives joint interest in the new home purchase
  • Non-occupied co-borrowers mortgage loan program is often call kiddie condominium loan because this type of strategy is often used by parents who want to help their children be first time homeowners

Non Occupied Co Borrowers With FHA Loans: Who Qualifies To Be Non Occupied Co Borrowers With FHA Loans

The Federal Housing Administration prefers a familial relationship, relative, between the borrower and the non-occupied co-borrower but this is not a mandatory within the FHA lending guidelines. HUD, the parent of FHA, allows anyone who is related to borrower by law, marriage, or blood to be non-occupant co-borrowers. There can be more than one non-occupant co-borrowers added to a FHA Loan.

  • Examples of familial relationships are the following:
    • Parents
    • Children
    • Grandchildren
    • Grandparents
    • Uncles
    • Aunts
    • Brothers
    • Sisters
    • In laws 

The non-occupied co-borrowers credit and income is used to qualify for the loan of the borrower

  • They will both have joint ownership in the subject property
  • Non-occupied co-borrowers are only allowed for single family dwellings if the down payment is going to be 3.5%

FHA Guidelines On Non Occupied Co Borrowers With FHA Loans

The Federal Housing Administration have strict guidelines for both borrowers and non-occupied co-borrowers.

The borrower needs to show and prove two years of income, credit history, and asset history.

  • The borrower needs to be a legal resident of the United States
  • If non-occupant co-borrower is a permanent resident but not a citizen, they must provide a copy of their Green Card and social security card
  • By legal resident, a non permanent resident is deemed a legal resident
  • As long as they can provide documentation that proves and documents that they are in the United States legally and have the authority to be able to work in the United States
  • Also as long as they have a social security number and have a two year history of income history, credit history, and asset history

FHA Lending Guidelines: Occupying Co Borrowers And Non Occupied Co Borrowers With FHA Loans

Occupying co-borrowers will have the same liability as the borrower and needs to guarantee the note and sign all the mortgage documents.

  • Occupying co-borrowers also be on title to the subject property
  • Their credit, asset, liability, and income information will be used to underwrite the loan
  • Non-occupied co-borrowers has another residence where they are either renting or owns and must have a long relationship with the mortgage loan borrower
  • The non-occupied co-borrowers assets, liabilities, credit, and income will be used to qualify for the borrower’s mortgage loan and they need to sign all mortgage docs

Cases Where Non Occupied Co Borrowers With FHA Loans Are Needed

Non-occupied co-borrowers are necessary in order for the borrower to qualify because they do not qualify with their income alone.

  • Cases where the non-occupied co-borrower is necessary is when the borrower is unemployed, makes cash income, have no credit history, have little or no work history, little assets, have high debt to income ratios,  or self-employed individuals who write off many expenses

Home Buyers who need to qualify for home loans with a direct lender with no lender overlays on government and conventional loans, contact The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at We are available 7 days a week, evenings, weekends, and holidays.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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