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  • Gil Kerkbashian

FHA cosigners and non occupant borrowers

gil@realestateloans.com


There are many questions about the main FHA loan guidelines for tenancy for single-family mortgage. According to FHA loan rules found in HUD 4155.1, a borrower should occupy the home purchased with a single-family FHA home mortgage as his/her personal home as a condition of loan approval.


However what about cases where two or more individuals are obliged on the FHA home mortgage? Do both individuals need to satisfy the occupancy requirement?


At least someone obligated on the FHA loan must reside in the house as the main home, according to HUD 4155.1.


In cases where not all the customers will live in the home full-time, the loan is classified differently. As a result, there are different rules that might affect the home mortgage.


According to HUD 4155.1, Chapter 2 Section B, A non-occupying borrower transaction involves two or more customers where one or more of the customer( s) will not occupy the residential or commercial property as his/her main home. When there are 2 or more borrowers, but one or more will not inhabit the residential or commercial property as his/her principal home, the maximum mortgage is limited to 75% loan-to-value (LTV).


Debtors should take note of some exceptions to that 75% limit which are based upon family-type relationships.


Borrowers are eligible for maximum FHA loan funding for non-occupying debtor situations for FHA loan candidates who are related by blood, marriage, or law. Chapter Two describes these relationships, that include (however may not be restricted to) the following:

spouses

parents

children

siblings

stepchildren

aunts-uncles

nieces-nephews

... and, according to Chapter Two of HUD 4155.1, unrelated people who can document proof of a longstanding, significant family-type relationship not developing out of the loan transaction.


FHA loan guidelines also say that in cases where a parent is offering the residential or commercial property to a kid, the moms and dad can not be the co-borrower with the kid, unless the LTV is 75% or less.


While limitations do look for non-occupying co-borrowers, this kind of FHA loan is possible. It's best to discuss your specific requirements with a loan officer to see what might apply in your specific scenarios.

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