May 30, 2020

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FHA Loan Rules: Title Issues For Non-Borrowing Co-Owners

107There are plenty of situations that come up when more than one person wants to borrow on an FHA home loan, but there are just as many circumstances where two people may want to own a property purchased with an FHA mortgage, but only one of the two is applying for the loan itself.

FHA loan rules for this are found in HUD 4155.1 Chapter Four under the heading, “Title Issues Regarding Non- Borrowing Spouses or Other Parties in Interest”. The rules here state:

“If two or more parties have an ownership interest in the property, but only one of the parties is applying for the loan (and credit qualifies for the loan on his/her own), it is not required that the non-applicant individual(s) execute the mortgage note and security instrument.”

That means the borrower will be the only signing party on the mortgage under FHA loan rules, but Chapter Four adds an important caveat to this, reminding borrowers and lenders alike that state laws regarding these arrangements must also be recognized. “The lender is still required to ensure a valid and enforceable first lien on the property under applicable state law, which may require the execution of the security instrument (but typically not the note) by all parties who have an ownership interest in the property.”

Furthermore, “If the party in question must execute only the security instrument and not the note, he/she is not considered a borrower for FHA purposes, and therefore need not sign the loan application or be considered in credit underwriting.”

As the title of this section implies, in many cases this is what happens when a married couple want a home but only one person will apply for the FHA loan. However, being married is not a requirement for these rules to apply.

For more information on how these rules and the laws of your state for such transactions may apply in your situation, speak to a loan officer.

Do you have questions about FHA home loans? Ask us in the comments section. You can apply or get pre-approved for an FHA loan at, a private company and not a government website.

Joe Wallace - Staff Writer

By Joe Wallace

March 17, 2014

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for for (8) years and is currently the Associate Editor for

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