February 18, 2015
A reader asks, “I was hoping to get an FHA loan but I was wondering if my father could cosign? I was also wondering if it would be feasible of me to get a new car. (My current vehicle is giving me serious problems)”
FHA loans do permit non-occupying co-borrowers and co-signers. Talk to your loan officer about lender standards in this area, but in general when a family member co-signs or co-borrows there are procedures and considerations. FHA loan rules say that in cases where the LTV exceeds 75%, a loan with a non-occupying co-borrower is limited to a single unit property.
The other part of the reader question isn’t quite clear–is the reader asking if the FHA loan can include the purchase of a vehicle? The answer is no, FHA home loans are only for residences that are legally declared “real property” and taxable as same. That means the property to be purchased must have a permanent foundation among other concerns.
If the buyer is asking if it’s a good idea to take out a car loan at the same time as a home loan, the going advice about home loans includes avoiding other large credit applications at the same time. Why?
One consideration is the borrower’s DTI. The home loan applicant’s debt to income ratio (DTI) is an important calculation and would be severely affected by two major lines of credit being applied for at the same time. It’s best to avoid committing to new lines of credit in general when applying for a home loan for this very reason.
Do you have questions about FHA home loans? Ask us in the comments section. All comments are held for review before being published to the site.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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