I wanted to take time to write this article to clarify the rules regarding 2016 FHA Non Occupant Co-Borrower as well as some other items along the way. The common myth within the mortgage industry is that if you cannot qualify for a purchase home loan on your own that you won’t be able to buy a home. Well this couldn’t be farther from the truth as loan programs such as FHA have guidelines to where borrowers can have co-borrowers of the non occupant variety. By definition this means that the co-borrower can be used to qualify for the loan BUT this co-borrower cannot be someone who lives in the home as well for their primary residence. These people must live in their own primary residence in order to be used. When the co-borrowers are used for qualification, they go through the process as if they themselves are getting approved for the home. This co-borrower will need to have qualified income as well as all the other necessary minimum mortgage lending guidelines satisfied in order to be considered for the loan. There isn’t a limit to the amount of co-borrowers a potential borrower can have, but there are restrictions to who the co-borrowers can be per the 2016 FHA Non Occupant Co-Borrower
The 2016 FHA Non Occupant Co-Borrower has limitations as set forth by the FHA and what is updated in 2016 is the LTV limitations based on the non-occupying borrower stats. First of all, the non-occupying borrower transaction refers to a transaction involving two or more borrowers in which one or more of the borrowers will not occupy the property as their principal residence. This echoes what was explained earlier in this article, now there are also restrictions on maximum LTV for non-occupying borrower transactions: For non-occupying borrower transactions, the maximum LTV is 75%. The LTV can be increased to a maximum of 96.5% if the borrowers are family members, provided the transaction does not involve: a family member selling to a family member who will be a non-occupying co-borrower or a transaction of a 2-4 unit property. Now you’re probably wondering what constitutes a family member? Here is what the FHA considers a family member, so always make sure your co-borrower meets to following criteria or they will not be allowed on the application/loan.
– A Family Member is defined as follows, regardless of actual or perceived sexual orientation, gender identity, or legal marital status
o Child, Parent, or Grandparent
§ A child is defined as a son, stepson, daughter, or stepdaughter
§ A parent or grandparent includes a step-parents/grandparent or foster parent/grandparent
o Spouse or Domestic Partner
o Legally adopted son or daughter, including a child who is placed with the Borrower by an authorized agency for legal adoption
o Foster child
If you have read my previous articles on co-borrowers, you will know that there are a lot more guidelines that go into qualifying for the mortgage which will include which credit score from which borrower is used, the debt to income ratios needed, etc. This article mainly wanted to focus on updating and clarifying the 2016 FHA Non Occupant Co-Borrower definition and requirements. As there are borrowers out there who may have trouble obtaining a loan, the FHA allows for this to happen through the use of a non-occupant co-borrower so long as they adhere to the 2016 FHA Non Occupant Co-Borrower guidelines.
If there is a need for a non-occupant co-borrower for your FHA Loan, then you need to reach out to me ASAP as this can be a tricky subject to get through properly. Don’t let other lenders give you the run around as I can lay these rules out to you in a simple fashion and get your loan approved so you can get in that dream home of yours. Please feel free to call me any time day or night at 888-900-1020, email me at firstname.lastname@example.org, or feel free to visit www.loanconsultants.org.