One common question about FHA home loans involves adding borrowers to the loan. Some house hunters begin their search for a home by themselves, but along the way decide they wish to co-borrow with someone else.
The reasons vary–some borrowers get engaged to be married, others decide they’d rather share the expense of buying and owning a home with someone else, others want to purchase property with a family member.
Whatever the reasons, adding someone to an FHA loan depends greatly on where a borrower is in the application process.
FHA loan rules state that all borrowers must submit loan application data. No one can be added to an FHA loan without submitting their credit and employment details and other required information the same as the primary borrower. Lenders must have time to review the information and verify employment, income, credit history, etc.
There’s nothing wrong with adding a borrower, but FHA rules also state that an FHA loan must close “in the same manner in which it was underwritten and approved” which means if a borrower applies for and is approved for an FHA mortgage, at closing time he or she must finalize the loan in the same way it was applied for. A co-signer or co-borrower cannot sign on a loan they did not apply for.
FHA instructions to the lender state, “FHA may withhold endorsement of the loan if there are additional signatures on the security instruments and/or mortgage note of individuals not reviewed during mortgage credit analysis, except for a non-purchasing spouse or any requirements of a state or local jurisdiction necessary to perfect the lien.”
Any borrower who wants to add a co-borrower or co-signer must (except as described above) have the lender re-work the loan to include the new borrower or signer. When all paperwork is submitted with the additional borrower properly documented, reviewed, and approved, the loan could then move forward.