Articles Tagged With: Co-borrower

November 3, 2022

Do You Need A Co-Signer For An FHA Mortgage?

Some house hunters are worried they may not be able to qualify for a home loan on their own and feel the need to add a co-signer. Other borrowers are buying a home with someone else (often significant others or spouses) and need to have more than one name on the mortgage. FHA home loans (yes, refi loans too) allow one borrower or multiple borrowers. The key to understanding how loan approval works for an FHA mortgage is to remember that all parties to be obligated on the mortgage loan must be able to financially qualify. FHA Borrowers And Co-Borrowers FHA loan rules instruct the lender that to be considered eligible for an FHA home loan or refinance loan, “…all occupying and non-occupying Borrowers and co-Borrowers must take title to | more...

December 18, 2020

FHA Home Loan Rules For Second Homes, Vacation Homes

By Joe Wallace

Investing in a vacation home is tempting for many. Some borrowers don’t want a vacation home but need a second home because of changes in job requirements, family size, or other factors. Do borrowers have the option of purchasing a vacation home or a second home with an FHA mortgage? FHA loan requirements for loan approval include a rule stating that the home be used as the primary residence; occupancy is a condition of loan approval for an FHA single family forward mortgage loan. You must be plan to use the house you buy with the FHA mortgage as your main address, and in cases where there’s an increase in family size or a change in job location. But a vacation property? Not permitted under the rules in HUD 4000.1 | more...

September 28, 2018

FHA Home Loan Approval Questions Part One

By Joe Wallace

FHA home loan approval is a process that requires your lender to review your credit history, employment history, and many other factors before deciding to approve or deny a home loan application. There are many questions about this process, and the more answers you have before yo start filling out applications, the better. The answers in this blog post pertain to FHA loan basics, but also rules for self-employed borrowers and those earning commission income. FHA Loan Approval Basics: What Do I Need To Know? The lender will pull copies of your credit report and review your payment history for the 12 months leading up to the mortgage loan application. FHA loan rules are similar to other home loan requirements in this area; coming to your FHA mortgage application process | more...

What Credit Score Is Needed For An FHA Mortgage?

June 13, 2018

FHA Home Loans With Non-Occupying Co-Borrowers

By Bruce Reichstein

Do FHA home loans have rules for transactions with non-occupying co-borrower? The short answer is yes, there are considerations for FHA mortgage loans that feature one or more borrowers who will occupy the property, but also a borrower who will not. These rules are found in HUD 4000.1 and include requirements for the basic transaction-at least one borrower MUST occupy the home to be purchased with an FHA mortgage as a condition of loan approval. This is normally supposed to happen within 60 days of loan closing according to FHA loan rules. Lender standards may also apply. FHA loan rules have some basic requirements for co-borrowers who will not occupy the home, including the following from HUD 4000.1: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take | more...

March 29, 2017

Cosigners and Co-Borrowers On FHA Loans

By Joe Wallace

In our previous blog post we discussed an FHA loan reader question about co-borrowers and their status. What is the basic difference between a cosigner and a co-borrower and how does an FHA loan work in such cases? FHA loan rules in HUD 4000.1 differentiate between a cosigner and co-borrower; the cosigner, while liable for the loan, does not have any ownership in the property. The co-borrower has both financial responsibility and ownership. Both cosigners and co-borrowers must have a legal primary residence in the United States or be U.S. citizens. Borrowers, co-borrowers, and cosigners all must provide basic information to the lender including Social Security numbers. Co-borrowers and cosigners are subject to the rules of HUD 4000.1 that restrict who can participate in an FHA loan transaction: “A party | more...

March 29, 2017

FHA Loans With A Non-Occupying Co-Borrower

By Bruce Reichstein

How does having a non-occupying co-borrower affect your FHA mortgage? What happens if one of the borrowers decides they want a change in their status as occupying or non-occupying? A reader asked us a question along these lines recently in the comments section: “I just purchased my home in November 2016 with my husband’s uncle as a co-borrower (not living in the property). Now he is getting a divorce and his soon-to-be ex-wife wants the househe basically just helped me qualify of put the down payment to purchase and pay the mortgage on my ownhe even signed hes rights to the title the day we signed for the property is I was told. I could put in that paper after about 6 months of having the property but now I | more...

January 4, 2017

FHA Loan Co-Signers & Co-Borrowers

By Joe Wallace

A reader asked us a question this week in the comments section about FHA loan co-signer and/or co-borrower rules. “If there is more than one person on the loan application, does it matter what percentage each person owns?” There are a number of variables that need to be addressed to properly answer this question. For example, does the reader refer to a co-signer, or a co-borrower? Are the applicants legally married? If so, do they reside in a community property state? FHA loan co-signer rules in HUD 4000.1 don’t specify a percentage of ownership for co-signers. The rules simply state the co-signer is “liable for the debt”. FHA loan rules for eligibility of co-borrowers (occupying and non-occupying) don’t mention a percentage of ownership, either: “To be eligible, all occupying and | more...

June 24, 2016

FHA Loan Questions: Co-Borrowers

By Joe Wallace

A reader asks, “My husband is a co burrower on his mothers mortgage loan and he has been asking her to remove his name from it but she hasnt. The mortgage has affected his credit and has made it hard to get a home of our own. Can his name be removed from the mortgage or is this something we need a lawyer for?” Before answering this question, let’s examine how the FHA defines the role of a co-borrower. Page 128 of HUD 4000.1 states: “To be eligible, all occupying and non-occupying Borrowers and co-Borrowers must take title to the Property in their own name or a Living Trust at settlement, be obligated on the Note or credit instrument, and sign all security instruments. In community property states, the Borrowers | more...

August 6, 2012

FHA Loan Reader Questions: Occupancy Rules For Multiple Borrowers

By Joe Wallace

A reader asks, “In document #946602 “Affidavit of Occupancy” – paragraph 1.1 says:

July 13, 2011

FHA Loan Amounts for Loans With Non-Occupying Co-Borrowers

By Joe Wallace

FHA loans permit a buyer to apply for the mortgage with a non-occupying co-borrower, which is defined as someone financially obligated on the mortgage and required to sign all legal paperwork to that effect, but who is not living on the property purchased with the FHA loan as their principal residence. In these cases, FHA rules state that the loan amount is limited to a 75% LTV, which means the borrowers must provide the remaining 25% of the purchase price. Some borrowers may read that feeling defeated before they start if that remaining 25% is too much to come up with, but FHA loan applicants should keep in mind an exception on this 75% LTV requirement for non-occupying co-borrowers who are also related to the occupying borrower. Specifically, FHA requirements | more...