Can I cosign on an FHA Loan and own half the property?

5 Replies

I got my start with investing by doing an owner occupied 4 plex using an FHA loan. Nowadays, I have more units than I care to manage while holding a day job I don't want to leave. I have some money and knowledge, but little desire to manage more units or go through the rehab/stabilization period. I know there are many ambitious new investors with the exact opposite problem, no money but tons of ambition and time.

My question is this: Can I partner with someone who currently owns no property, buy a 4 plex (FHA loan) with them using my money as down payment, my great credit score, low DTI, etc, and own 50% of the property on title? Of course, in return I would want them to manage it under my mentorship, and put sweat equity into it and make my life easy. I believe if I found the right person, this could be a very equitable trade.

P.S. One detail that may or may not make a difference - I still own my original 4 plex under an FHA loan. Never refinanced it.

@Jason Powell I know that FHA allows a non-occupant applicant along side of an occupant applicant; however, given that you currently have an FHA loan, you may not qualify as such so you should reach out to some lenders to be sure. Also, were you wanting to be on the loan or just a money man? Pretty sure you would have to be on the loan in the aforementioned situation.

I figured I would have to be on the loan. That's part of the value I'd add with my credit, income, etc.

There are very few exceptions that allow a borrower with an existing FHA loan to take out another one. To my knowledge, the only way to do it is when a parent with an existing loan co-signs for a child as a non-occupying co-borrower. You may want to check with FHA to see if their non occupying co-borrower program is exclusive to related parties (parent to child) or if this could apply to unrelated parties. Maybe @Chris Mason would be able to shed some more light.

@Jason Powell In what you a proposing, you would be a non-occupant co-borrower. FHA allows that in very limited situations/relationships. Even if your situation qualified, you would be limited to a 1-unit property and would have to do 15% down.

Also, keep in mind that what there are multiple borrowers on a loan, then loan is always underwritten on the lowers FICO. So irrespective of how high a FICO you might have, if your "partners" FICO is low, then the loan would be underwritten using the lower FICO.

Upen Patel, Lender in (#National Lender NMLS 1374243)
(571) 331-5161

Thank you both for the responses. Sounds to me like what I'd be trying to accomplish just isn't possible, or at the least just not attractive.

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