Adding Multiple Non-Occupant Co-Borrowers on Mortgage Loan
This guide will cover having multiple non-occupant co-borrowers added on FHA and conventional mortgage loans. HUD, the parent of FHA, allows borrowers to add non-occupant co-borrowers if the main do not qualify with income.
Adding multiple non-occupant co-borrowers is only allowed with FHA and conventional loans. Fannie Mae Conventional loans do allow non-occupant co-borrowers. Freddie Mac does allow non-occupant co-borrowers to be added to conventional loans. However, Fannie Mae and Freddie Mac do not require non-occupant co-borrowers to be related by law, marriage, or blood on conventional loans.
VA and USDA loans do not allow the main borrower to add multiple non-occupant co-borrowers. VA only allows married spouses to be added as co-borrowers. Non-occupant co-borrowers must be family members or relatives and be associated with main borrowers by blood, marriage, or law on FHA loans but not conventional loans. In this article, we will discuss and cover adding multiple non-occupant co-borrowers.
Eligibility Guidelines For Adding Multiple Non-Occupant Co-Borrowers
For example, the following would be eligible non-occupant co-borrowers on FHA loans:
- parents
- step-parents
- brothers
- sisters
- aunts
- uncles
- grandparents
- children
- stepchildren
The above types of co-borrowers ca-borrowers can be added as non-occupant co-borrowers on FHA loans: Non-occupant co-borrowers will go on the mortgage loan but not on the title to the property. Non-occupant co-borrower must provide the mortgage lender with all income, liability, and asset information.
What Are The Guidelines For Multiple Non-Occupant Co-Borrowers
HUD and Fannie Mae add multiple non-occupant co-borrowers to the main borrower. To qualify as non-occupant co-borrowers for FHA loans, borrowers must be family members or relatives of the mortgage loan borrower related by blood, marriage, or law. Adding on non-occupant co-borrowers who are related by blood, law, and marriage enables homebuyers to qualify for FHA loans with a 3.5% down payment.
HUD and Fannie Mae allow the main borrower to add multiple non-occupant co-borrowers. However, HUD requires all multiple non-occupant co-borrowers to be related to the main borrower by law,, marriage, or blood on FHA loans. Fannie Mae and Freddie Mac does not require multiple non-occupant co-borrowers to be related by law, marriage, or blood.
To qualify as non-occupant co-borrowers, they need income. For example, if the non-occupant co-borrower is currently living with family or friends and is living rent-free, that person can qualify as a co-borrower. HUD, the parent of FHA, will allow non-relatives to be non-occupant co-borrowers. However, if non-occupant co-borrowers are not related to the main borrowers by law, blood, or marriage, then a 25% down payment is required.
Cases When AUS Conditions Verification Of Rent
Rental verification is only valid if the non-occupied co-borrower pays their landlord a check every month and provides 12 months of canceled checks paid to the landlord. There are instances where the Automated Underwriting System Findings may condition verification of rent for borrowers or co-borrowers. Bank wires from the non-occupant co-borrower to the landlord are allowed as long as the non-occupant co-borrower can provide 12 months’ bank statements of funds being withdrawn from their bank account to the landlord’s bank accounts.
Mortgage Lenders For Bad Credit will exempt verification of rent if the borrower is living rent-free with family to save money for the down payment and closing costs. Living rent-free letter provided by the lender needs to be completed by the property owner stating the borrower is living rent-free.
A verification of rent, also known as a VOR, is also required, a statement signed by the landlord attesting that the tenant has been paying rent timely in the past 12 months with no late payments. If the non-occupant co-borrower rents their home or apartment from a registered property management company, a letter from the manager is sufficient proof of rent verification. VOR Form completed and signed by the property manager can be used instead of providing canceled checks or bank statements.
Will The Multiple Non-Occupant Co-Borrowers Have a Hard Time Getting A Mortgage In The Future?
Being a non-occupant co-borrower will not affect the non-occupant co-borrower with their debt-to-income ratios after 12 months. For example, here is a case scenario. If the non-occupant co-borrower is a renter who wants to qualify for a mortgage loan after one year. Non-occupant co-borrowers can qualify for a home mortgage after 12 months.
The non-occupant co-borrower needs to provide 12 months of canceled checks from the main borrower, proving they are not responsible for the mortgage payment.
Doing so, the debt of being a non-occupant co-borrower will not count and be exempt. The risk of being a non-occupant co-borrower is that if the main borrower is late on their mortgage payment, it will affect their credit payment history and credit scores on their credit report.
Can Borrowers Have Multiple Non-Occupant Co-Borrowers?
The Federal Housing Administration allows for more than one non-occupant co-borrowers to be added to the main borrower’s FHA Loan to qualify for income. Borrowers can add both parents as non-occupant co-borrowers to qualify for an income. Or they can have a brother or sister as well as their spouse as non-occupant co-borrowers
The reason of needing multiple non-occupant co-borrowers is because the main borrower needs additional income to meet the debt-to-income ratio requirements.
Home Buyers who need to qualify for a mortgage with a five-star mortgage company licensed in multiple states with no lender overlays on government and conventional loans can contact us at Mortgage Lenders of Bad Credit at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Mortgage Lenders For Bad Credit has zero lender overlays on FHA, VA, USDA, and Conventional loans. Mortgage Lenders of Bad Credit are mortgage brokers and correspondent lenders on non-QM loans and bank statement mortgage loans for self-employed borrowers.
This guide on multiple non-occupant co-borrowers was updated on May 13th, 2023.
