FHA - Using a Non-Occupying Co-Borrower

FHA will allow a co-signer that is not living in the house unlike conventional loans in which the borrower still needs to meet certain qualifying ratios even if they have a co-signer. This can be great for first time homebuyers. One thing that so many get confused no matter what type of loan they are applying for is that a co-signer with good credit can't overcome the bad credit of the primary borrower. Meaning that the co-signer with good credit can't get you a better priced loan.

On FHA loans, 100% of the co-signer's income can be used no matter how much money the borrower makes. This also can help the borrower to achieve the maximum fha loan limits depending on what county that they are buying in. Each county has different mortgage amounts. And by having this co-signer, this can help those borrowers that might have some income that they can't prove, knowing that they can still make the higher mortgage payment. One thing to keep in mind though is that the co-signer's debt is also used in this equation. If their debt is extremely high, this co-signer might not help the situation.

Key Reminder : The co-signer can not currently have a FHA loan in their name. For some more information on this topic, please go to http://www.hud.gov/offices/hsg/sfh/ref/sfhp2-03.cfm

If you have any questions regarding this program and how it can assist you in qualifying your clients to purchase their dream home today, give me a call.


Make it a great day!

Travis D. Coile
Branch Manager
Gateway Mortgage Group
615.290.4485