Thus, FHA loans may not work in all cases e.g., purchasing a condo, townhouse or house for your child who is a fulltime college student or is seeking or just started employment. This income will not count because it does not continue throughout the year. Typically, the borrower’s income will only be counted if they have a history of income and at least one to two months at their present job.įor example, consider a fulltime college student who does not work when school is in session but has worked fulltime during the past three summers. However, the occupant borrower is expected to have adequate income in excess of liabilities to significantly contribute to the monthly mortgage payment. Also, the FHA guidelines allow the non-occupant co-borrower’s income to be used for income qualification. With an FHA loan, you can gift the down payment funds to a relative and, under certain circumstances, other individuals. Since you can gift all of the down payment funds, there is little reason to be a non-occupant co-borrower on a Fannie Mae loan. This means that the occupant borrower must qualify based on their income only. The co-borrower’s income cannot be used for income qualification purposes. Thus, the VA option is not realistic.įannie Mae allows only the assets on the non-occupant co-borrower to be considered these assets may be used to meet down payment and reserve requirements. Most if not all VA lenders will not issue a loan without a complete guaranty. Also, the VA guaranty covers only the veteran’s portion of the loan. Although both incomes can be used to qualify for the loan, the borrower’s (veteran’s) income must be adequate to repay his/her portion of the loan. The VA does not specifically prohibit non-occupying co-borrowers however, the VA requires that such a loan be sent to them for prior approval. To obtain a VA loan, the occupying borrower will have to be an eligible veteran. There are substantial differences in the programs.
There are four programs that allow for non-occupant co-borrowers – VA, Fannie Mae, FHA and Freddie Mac. All primary residence loan programs allow you to gift down payment funds however, your income and assets will only be considered if you are a non-occupant co-borrower on the mortgage. In general, this type of mortgage is called a non-occupant co-borrower loan. There are several ways in which someone can help a child, parent or sibling obtain a home.
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