Fannie Mae – No Credit Score for Borrower With Non-Occupant Borrower

Question:

Does Fannie Mae allow for a borrower with no score when there is a non-occupant borrower with a credit score?

Answer:

Yes, Fannie Mae updated section B3-5.4-01 in February of this year with their DU release notes. Previously, this same section titled “DU Loan Casefiles: At Least One Borrower Has No Credit Score and Another Borrower Has a Credit Score” required all borrowers to occupy, but with the February updates, this changed, and they removed this statement.

Of importance: your maximum LTV is 95% when you have a non-occupant co-borrower. Therefore, if borrowers are looking for a 97% LTV, all borrowers would have to occupy.

https://selling-guide.fanniemae.com/sel/b2-2-04/guarantors-co-signers-or-non-occupant-borrowers-subject-transaction

Old selling guide:

DU Loan Casefiles: At Least One Borrower Has No Credit Score and Another Borrower Has a Credit Score

If one (or more) borrower(s) has a credit score and at least one borrower does not have a credit score, then DU will apply the following requirements:

• The property must be a one-unit principal residence, and all borrowers must occupy the property.
• The transaction must be a purchase or limited cash-out refinance.
• The loan amount must meet the baseline loan limits—high-balance mortgage loans are not eligible.
• Reserves may be required as determined by DU.
• If the borrower(s) with a credit score is contributing more than 50% of the qualifying income, the lender is not required to document a nontraditional credit history for the borrower(s) without a credit score.
• If the borrower(s) with a credit score is contributing 50% or less of the qualifying income, the lender must document a nontraditional credit history for each borrower.

New Selling Guide after February 5, 2025:

• Lenders may submit loan casefiles to DU when one (or more) borrower(s) has a credit score and at least one borrower does not have a credit score. The following documentation requirements apply:
• If the borrower(s) with a credit score is contributing more than 50% of the qualifying income, the lender is not required to document a nontraditional credit history for the borrower(s) without a credit score.
• If the borrower(s) with a credit score is contributing 50% or less of the qualifying income, the lender must document a nontraditional credit history for each borrower without a credit score. The lender can complete this manually or may rely on the DU message indicating that the 12-month asset verification report satisfies this requirement when DU completes a cash flow assessment. See B3-5.4-03, Documentation and Assessment of a Nontraditional Credit History, for additional information.

MortageGuidelines.com Resource:

MortgageGuidelines.com provides an All Agency Comparison Chart on Non-Occupant Borrowers, which is located under “Guideline References” in the Category of “All Agency.”