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FHA – Non-Occupying Co-Borrower – Watch Out!
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FHA – Non-Occupying Co-Borrower – Watch Out!
Question:
My borrower does not have a credit score, so we added a non-occupying co-borrower (his parents). We still cannot obtain AUS approval, so I need to proceed manually. I’m being told I can’t use the non-occupant co-borrower’s income to qualify on a manually underwritten loan if the borrower occupying the property has no credit score. Is this correct?
Answer:
Yes, this is correct per FHA guidelines.
If the loan receives an AUS Total approval for an occupying borrower with no credit score, the non-occupant’s income has been considered, and the approval stands.
If an occupying co-borrower has no credit score, the non-occupant’s income may not be used unless AUS approval is obtained.
Reference:
FHA Handbook – 4000.1 II.A.5.d.vii [Subscribers, our chart link takes you to the exact page in the FHA guidelines so you no longer need to look it up!]
Mortgage Guideline Supporting Resources – Non-Occupying Co-Borrower – All Agency Comparison Chart found under “Guideline References” in “Charts & Checklists”.
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