HUD HOC Reference Guide

Exception to a Borrower Having More than 1 FHA loan (Non-Occupying Borrower and Co-borrower)

Chapter 2
Mortgage and Credit Guidelines
Page 2-03

The purpose of this provision is to enable a family member to have a joint interest in a property that would enable another family member to attain principle residence homeownership.

All borrowers regardless of occupancy status must sign all documents relating to the purchase of the property. This provision is not intended to circumvent FHA's ban on loans to private investors. Mortgages with non-occupying co-borrowers are limited to one-unit properties if the LTV will exceed 75%. If a parent is selling to a child, the parent cannot be the co-borrower with that child on the new mortgage, unless the LTV is 75% on less.

For maximum financing the non-occupant borrower must be related by blood, marriage, law or be an unrelated individual that can document evidence of a family-type, longstanding, and substantial relationship?not arising out of the loan transaction.

Non-occupying co-borrowers must have a principal residence in the U.S. unless exempted due to military service with overseas assignments, or a U.S. citizens living abroad.

Please see: HUD Handbook 4155.1, Section 2.B and 4.B

Content Archived: November 5, 2012