FHA Non-Occupant Co-Signer

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FHA Non-Occupant Co-Signer

The FHA Home Loan is one of the very few loan programs available in the marketplace that allows a co-signer that is not required to live in the property. Some of the other loan programs require a co-signer to be considered a co-borrower and they must occupy the property to utilize their credit and income for loan qualification.

On the other hand, the FHA Home Loan permits a non-occupant co-signer. This means that a borrower can have someone co-sign on the loan with them and the co-signer can live in a completely different property. The borrower is able to utilize the co-signer’s credit and income to help them qualify for the loan. The way an FHA utilizes a co-signer is more in line with traditional thinking on the purpose of a co-signer…which is to strengthen the overall loan file.

FHA does require a non-occupant co-signer to be a family member of the borrower. FHA defines a family member as a Father, Mother, Brother, Sister, Grandfather, or Grandmother.

Having or utilizing a co-signer is not a requirement. It is optional. There are some borrowers that can benefit greatly from having a co-signer. Typically, this is an applicant with very limited or marginal credit/income. A co-signer’s credit and income are combined with the borrower which enhances the structure of the loan and increases probability of loan approval.

Although the non-occupant co-signer is not required to occupy the subject property, they are still obligated on the mortgage loan. The mortgage loan will report to both the borrower and co-signer’s credit reports with the respective payment history.

FHA Non-Occupant Co-Signer