Does FHA allow Non-Occupant Co-borrowers in order to help for qualifying purposes?
Yes, this is allowed as long as both the borrower and co-borrower are family members and they qualify with all combined debts. The purpose of this provision is to enable a family member to have a joint interest in a property so as to enable another family member to attain homeownership. All borrowers regardless of occupancy status must sign all documents relating to the purchase of the property. This provision is not intended to circumvent FHA’s ban on loans to private investors. Mortgages with non-occupying co-borrowers are limited to one-unit properties if the LTV will exceed 75%. If a parent is selling to a child, the parent cannot be the co-borrower with that child on the new mortgage unless the loan-to-value is 75% or less.
