FHA Non Occupying Co-Borrower rules in a nutshell.
Typically called a 'Kiddie-Condo' loan. FHA allows family members to help their kids buy their first home. Whether they are in school with no income or out in the real world and just need a little extra income to qualify.
FHA allows for a family member to be a non-occupying co-borrower in order to assist in qualifying. This is available when your borrower would qualify for the loan when considering their credit but they wouldn't qualify because of debt ratios, employment, income and assets.
Adding a NOCB does not resolve credit issues!! The occupying co-borrower must be credit worthy or have no credit at all. Bad credit will kill the deal. No credit - no problem.
The occupying co-borrower does not have to be employed and does not have to invest in the transaction.
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Tom Burris
DallasLoanGuy.com
Dallas, TX
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Fantastic info Tom!
Hey, jump in on my LIVE WebTV broadcast in the evenings and feel free to educate us now and then.
Cheers, KIM. The WebTV Realtor.
Tom.... excellent.... in regards to your statement about the credit. So many think that you can use a co-signor for credit. Even many loan officer lead the consumer believing this. Nice job at highlighting this.
Hi Missy: Busy, yes. Busy taking applications and telling them why they no longer qualify. :-(
Kim: I will check it out.
Jeff: Thanks for the comments. I get the same questions from other loan officers. They think a NOCB cures credit and it doesn't!!
Great post. This is information that every LO that has FHA needs to be aware of.
I just got a message on my chat applet about this post. People need to realize that I cannot reply to them when they message me when I am offline.
:-(
I own my home free and clear. My credit score is about 750. I am 58 years old. My income for last year and this year will only be about 10,000 for each year. The two previouys years was about 28,000. I would like to place a 100,000 mortgage on my house valued at about 135,000. Can I use the FHA non-occupying co-borrower and what income level would they need. They own their home outright and are on social security. Thank you
I am not sure I understand the question, you say 'my' house and 'they' own?
Are you trying to take cash out? If so, then you can't do this in Texas. If you are outside of Texas, I might be able to refer you to another lender who can give you personal service.
I recently purchased my first home within the qualifying time period for the 7500 tax credit. I have seen alot of questions about this and have not seen a solid answer.
I purchased my home with an FHA loan and needed my mother to sign off as a co-borrower. Under FHA a co-borrower means that she is on the title.
She is a non occupying co borrower obviously and I file as a single tax payer. ( we are not married obviously).
Am I in or out?
You are in. Co-borrower is out. I recommend that you consult your CPA, but nothing about having a co-borrower disqualifies the purchase of your primary residence.
Hello, I came across this board and I have a similar question. I am buying a house and am having my soon to be father in law be a co-borrower for me. I too have an FHA loan and am not marrying my fiances dad could I still qualify? We have to give FHA a letter stating our relationship so it will be in writing he is my father in law to be and will not be living there.
Hi Kimberley
I am not sure I understood the question.
I am sorry it looks like my message got cut off. My question was is there a difference between co-borrower and co-signer for FHA? ANd could I still qualify for the tax credit even though my fiances father is the co-borrower?
The person not living there is still considered co-borrower..... a Non-Occupying Co-Borrower.
Yes, you would still qualify for the tax credit. Only YOU though.... not the Co-Borrower.
Might be a tough sell to underwriter to leave off fiance and add future father-in-law. Might work.
Thinking about doing a Non-Occupying Co-Borrower for my daughter. Questions is does this go on my credit report? I know if I want to buy another house that, if she has proof of ontime payments for 6 months to 1 year, that I should be albe to get another house. However, what if I want a new car? Do all lenders take the NO-CB into account?
It goes on your credit report. I don't know how auto lender would view this
Does FHA IE repair escrow have a stip that a non-occupying co-borrower disqualifies you from this loan type on a HUD REO house? Seems crazy, is this really true?