March 19, 2015
A reader asks, “Hi i am trying to get a mortgage but have good credit but low income. I was wondering if someone could help me be a non-occupying borrower with bad credit but excellent income a job help, basically use his income not his credit.”
FHA loan rules are very specific about non-occupying co-borrowers. This is because there are many different types of circumstances where a borrower may have an occupying non-borrower, or an occupying co-borrower, or in the case of this reader question, a non-occupying co-borrower.
Each of these circumstances is viewed slightly differently for several reasons, and there are circumstances that may apply to one type of borrower that don’t apply to another.
For example, a spouse who occupies the home but does not borrow; this situation may still require the lender to consider the financial aspects of the non-borrowing spouse. Why? Some states have community property laws that govern how debts are handled in a legal marriage.
A non-occupying co-borrower who is a member of the immediate family may get different consideration than one who is not. But in any event, FHA loan rules in HUD 4155.1 Chapter Four Section A state clearly:
“When determining the creditworthiness of borrowers, co-borrowers, or cosigners, the underwriter considers their:
–income
–assets
–liabilities, and
–credit histories.”
So the basic answer to the question, can a co-borrower apply without having his or her credit history checked is no, that isn’t possible.
Do you have questions about FHA loan rules? Refinance loans? Ask us in the comments section. All comments are held for review before being posted to the site.
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 www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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