Homeownership dreams are within reach, thanks to myriad of programs and loans to fit your needs. If you need a little help making those dreams come true and securing a mortgage, there is the option of co-borrowing with a non-occupant.
A non-occupying co-borrower is someone, like a parent or sibling, that is willing and able to be a borrower on a mortgage but will not be living in the home. Because they will also have responsibilities towards the mortgage loan, choose your co-borrower carefully.
Different Loans Have Different Rules Regarding Non-Occupying Co-Borrowers
Because there are many different loans to choose from and each have their own rules, requirements for non-occupying co-borrowers will differ. For example, if you take out a FHA loan, at least one person is obligated to live in the home as a primary residence and the maximum mortgage loan-to-value may be limited.
Double Check Home Ownership Stakes When Using A Non-Occupying Co-Borrower
Depending on the mortgage that’s taken out and any restrictions and requirements, the non-occupying co-borrower may or may not have ownership stakes in the home. Conventional loans require non-occupant co-borrowers to sign on the loan, but they don’t require them to be on the property title.
For FHA loans, non-occupant co-borrowers are required to be on both the title and the mortgage.
Non-Occupying Co-Borrowers Are Also Responsible For Loan Repayment
When a non-occupying co-borrower borrows on a loan, they’re also responsible for the loan’s repayment. If the borrower living in the home falls behind on payments, the non-occupying co-borrower will also get late notices.
Before taking out a home loan with a non-occupying co-borrower, tell your loan officer that you plan to do so. This will help your lender determine your specific needs and any requirements and restrictions.