Non-Occupant Co-borrowers

Gustan Cho Associates

Non-Occupant Co-Borrower To Qualify For Mortgage

non-occupant co-borrower is a person who will basically be co-signing for the mortgage loan borrower in order for the main mortgage loan borrower to qualify for the mortgage loan with regards to income.  The main borrower can get a non-occupant co-borrower if the main borrower is self employed and cannot qualify due to little income, no income, or negative income.  If the main borrower is self employed and has negative income due to them writing too many expenses, no worries.  The negative income will not offset the positve income from the non-occupant co-borrower.  If the main borrower is self employed and has negative income, mortgage underwriters will just list the main borrower as a zero income borrower.  You can have no job and/or no income and still qualify for a mortgage loan as long as you have a non-occupant co-borrower.

Can Anyone Be A Non-Occupant Co-Corrower?

The Federal Housing Administration, FHA, states that a non-occupant co-borrower needs to be related to the borrower by blood, law, or marriage.  A brother, sister, mom, dad, grandmother, grandfather, brother in law, sister in law, mother in law, father in law, step mother, step father, step brother, step sister,  can all be non-occupant co-borrowers.  Things can get tricky when you are getting into cousins, aunts, uncles, first and second cousins, and other distant relatives.  Some mortgage lenders are real sticklers when it comes to non-occupant co-borrowers while other mortgage lenders are really loose and extremely understanding.

Reason For Non-Occupant Co-Borrower

The main reason mortgage loan borrowers add non-occupant co-borrowers is because to qualify for income.  You cannot add a non-occupant co-borrower due to your credit scores being low or due to not meeting the mandatory waiting period requirements.  When you add a non-occupant co-borrower, both the main borrower and non-occupant co-borrower’s credit scores will be reviewed and the lower of the two middle credit scores will be used for credit qualification purposes.

Will Non-Occupant Co-Borrower Chances Of Buying Property Be Affected?

If you are a non-occupant co-borrower for a family member, the mortgage payment that the main borrower is paying will not affect you after 12 months.  If you, as a non-occupant co-borrower decide to purchase a home after 12 months of timely payment history from the main mortgage loan borrower, the mortgage payment you co-signed for will not affect in your new mortgage company calculating your debt to income ratios as long as you can provide 12 months of timely canceled checks from the main borrower.

Risks Of Being Non-Occupant Co-Borrower

If you are a non-occupant co-borrower and the main borrower is late on his or her mortgage payments, it will affect your credit scores and most likely drop your credit scores.  Also, in the event if the main borrower defaults on his or her mortgage loan, the mortgage company can come after you for your assets since you are a co-signer on the loan of the main borrower.

What If Non-Occupant Co-Borrower Is Not Related By Blood, Law, Marriage

I have closed many mortgage loans where the non-occupant co-borrower was not related to the main borrower by blood, law, or marriage.  For example, one recent file I closed on, the non-occupant co-borrower was the boyfriend of the main borrower’s sister.  This case scenario worked because both the sister of the borrower and the boyfriend were living together and had a child together and it was classified as a common law marriage when in fact it was not legally a true marriage because it was not recorded.

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Related> FHA non-occupant co-borrower guidelines

Related> Pros and cons of being a non-occupant co-borrower

Related> Conventional loan with non-occupant co-borrower

Related> Non-occupant co-borrowers

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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