FHA Loan Loan Limits and Non-Occupying Co-Borrowers
If you’re buying a single-family home with an FHA insured mortgage, FHA loan rules require you to certify the property will be your primary residence. But FHA loans do permit a loan with co-borrowers who do not plan to occupy the property.
Chapter Three of FHA Handbook 4155.1 states, “A non-occupying borrower transaction involves two or more borrowers where one or more of the borrower(s) will not occupy the property as his/her primary residence.” This in mind, borrowers should know that there is a different FHA maximum mortgage permitted for a non-occupying borrower transaction in many circumstances.
“When there are two or more borrowers, but one or more will not occupy the property as his/her principal residence, the maximum mortgage is limited to 75% loan-to-value (LTV).” However, the rules do provide an exception to the 75% LTV rule for family members.
Chapter Three of FHA Handbook 4155.1 lists the exceptions for family members noting that in some cases the “family” does not have to include blood relatives as long as a family type relationship exists. “…maximum financing, as described in HUD 4155.1 2.A.2, is available for borrowers related by blood, marriage, or law, such as:
spouses
parents-children
siblings
stepchildren
aunts-uncles, and
nieces-nephews
or unrelated individuals who can document evidence of a longstanding, substantial family-type relationship not arising out of the loan transaction.”
There is one important clause in these rules. In situations where a parent is selling property to a child (who is purchasing said property with an FHA insured mortgage), the parent can only co-borrow with the child if the LTV is 75% or less.
When will the FHA loan limits in Nevada be raised again? Buyers need the help to secure suitable housing.
FHA usually reviews the loan limits near the end of the year but there’s no guarantee the limits will be raised–buyers will be informed of the new (or unchanged) FHA loan limits which would take effect in the new year under normal circumstances.
Here are all our charges… is this normal for a loan for $211,335 with a co-borrower?
ORIGINATION CHARGES
Loan Origination Fee Borrower 1.000% $ 2,113.35
Processing Fee Borrower $ 695.00
Underwriting Fee Borrower $ 725.00
OTHER CHARGES
2.907 % $ (6,204.93)
Appraisal Fee AMC Borrower $ 500.00
Credit Report Fee CREDCO Borrower $ 50.00
Tax Service Fee First American Borrower $ 69.00
Flood Certification Fee First American Borrower $ 8.50
Up-Front Mortgage Insurance HUD Borrower $ 2,113.35
Closing/Escrow Fee Borrower $ 900.00
Document Preparation Fee Borrower $ 50.00
Notary Fee Borrower $ 125.00
Lender’s Title Insurance Borrower $ 650.00
Endorsements Reconveyance Fee Borrower $ 50.00
Electronic Document Delivery Fee Borrower $ 75.00
Courier Fee Borrower $ 50.00
Sub-Escrow Fee Borrower $ 250.00
Owner’s Title Insurance Borrower $ 1,350.00
Mortgage Recording Charge Borrower $ 110.00
Transfer Tax Borrower $ 240.90
Hazard Insurance Reserves Borrower $ 85.00 x 3 mth(s) $ 255.00
County Property Tax Reserves Borrower $ 228.13 x 6 mth(s) $ 1,368.78
Daily Interest Charges Borrower $ 23.0641 x 15 day(s) $ 345.96
Hazard Insurance Premium Borrower $ 85.00 x 12 mth(s) $ 1,020.00
Hi Nicole–loan fees and charges vary depending on the market. There’s no way to look at the fees and charges and say for sure without knowing more about your housing market. Best advice–get in touch with an FHA housing counselor in your area if you have questions about fees and charges and consult a lawyer if you aren’t sure about the loan agreement.
We are wanting to help our daughter buy her first home in Nebraska. Realtors and lenders there have told us that we cannot cosign the loan because in Nebraska nonoccupants are not allowed to cosign on an FHA loan. Is this correct?
Hi Carol thanks for your question– I couldn’t speak to the specifics of Nebraska law but I do encourage you to contact the FHA directly for advice in this area.
How does one document a long standing family type relationship, is there a form for that?
You would work with your lender to establish the family relationship. The lender will explain what that financial institution needs.