I was told by a broker that a non-occupying cosigner does not qualify for the 3.5% down payment but instead has to put 25% down for FHA loan. I was told by another broker that it should be no problem, that they had never heard of such a rule and they even browsed the HUD website saying they couldn't find anything on the subject. However, the first broker said that after 2008, they came out with the Dodd Frank Act which changed regulations to the way banks give mortgages.
I searched the HUD website and cannot find it myself so if anyone has any information, please let me know!