FHA Non-Occupant Co-Borrowers: Your Guide to Approval
This guide will explain the requirements to get FHA approval for non-occupant co-borrowers. Find out eligibility criteria, application procedures and other tips to get favorable approval.
FHA Non-Occupant Co-Borrowers: Your Guide to Approval
Are you thinking about buying a home but don't have the financial means to secure a loan on your own? One of your options is to consider getting an FHA loan with a non-occupant co-borrower.
FHA loans are a popular option for buyers because they are offered by The Federal Housing Administration (FHA) and require little money down. An FHA loan allows a non-occupant co-borrower to be added to a loan so that the co-borrower can assist with the down payment and monthly payments.
What Does 'Non-Occupant Co-Borrower' Mean?
A non-occupant co-borrower is someone who will not live in the house being purchased, but who will sign the loan documents, agree to pay back the loan, and provide evidence of having the financial means to pay back the loan. This includes a co-signer, a guarantor, or somebody with an existing FHA mortgage in their name.
What Are The Benefits of Having a Non-Occupant Co-Borrower?
Having a non-occupant co-borrower on an FHA loan can help in a variety of ways. It can provide a larger down payment, help lower monthly payments, or help improve the loan-to-value ratio. It can also help with income requirements, as a non-occupant co-borrower can provide an additional source of income.
Are There Any Risks of Having a Non-Occupant Co-Borrower?
While a non-occupant co-borrower can be beneficial in many ways, there are also some risks associated with it. The non-occupant co-borrower's creditworthiness will be taken into consideration when the loan is being approved, and it can result in a higher interest rate. Also, if any payments are missed, the non-occupant co-borrower will be held responsible and could take a significant hit to their credit score.
Conclusion
A non-occupant co-borrower can be a useful tool to help you qualify for an FHA loan, but it is important to consider the potential risks before making a decision. Make sure you weigh all of your options before deciding if having a non-occupant co-borrower is the right choice for you.