FHA primary occupant has little/no income

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FHA primary occupant has little/no income

Michael J Scanlon
Realtor · Chicago, IL · Member since 2019 · 222 posts · 153 votes

If the primary borrower on an fha loan has little to no income (say a student just finishing school), can a co-signer or co-borrower still qualify them for a mortgage even if the co-signer or co-borrower is a non-occupant? How would this work?

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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
6y

Yup, that's a thing. 

If you're looking at 2-4 unit with a low down payment, not so much. More or less SFR only.

Add up everyone's liabilities, including the coborrower's personal house and the one being purchased.

Add up everyone's income.

Divide. Boom, DTI.

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    6y

    Yup, that's a thing. 

    If you're looking at 2-4 unit with a low down payment, not so much. More or less SFR only.

    Add up everyone's liabilities, including the coborrower's personal house and the one being purchased.

    Add up everyone's income.

    Divide. Boom, DTI.

    1Reply
  • Michael J Scanlon
    OP
    Realtor · Chicago, IL · Member since 2019 · 222 posts · 153 votes
    6y

    @Chris Mason

    But you’re saying not so much with a 2-4 unit?

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  • Randy Forcier
    Rental Property Investor · Biddeford, ME · Member since 2017 · 22 posts · 6 votes
    6y

    @Michael J Scanlon

    Non occupant coborrowers are not allowed on 2-4 unit FHA purchases, only 1 units.

    I believe the guidelines were set to prevent people from using straw buyers to purchase investment properties with a low down payment.

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    6y
    Originally posted by @Michael J Scanlon:

    @Chris Mason

    But you’re saying not so much with a 2-4 unit?

    FHA non-occ co-borrower 2-4 unit = 75% or 80% LTV + monthly mortgage insurance = why the heck would you do it FHA

    1Reply
  • Michael J Scanlon
    OP
    Realtor · Chicago, IL · Member since 2019 · 222 posts · 153 votes
    6y

    @Chris Mason

    Thanks Chris, I'm a bit newer to all this so I didn't know about the 2-4 rule for FHA co-borrowing. I appreciate it.

    1Reply
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