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Can a Non-Occupying Co-Borrower be a friend and not a family member
Can a Non-Occupying Co-Borrower be a friend and not a family member? I realize that HUD Guidelines require non-occupant co-borrowers to be related by law, blood, or marriage. Fannie Mae and Freddie Mac does not require non-occupant co-borrowers need to be related to the main borrower by blood, law, or marriage.
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1 Reply
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Yes, a non-occupying co-borrower can be a friend and not a family member, but this is determined by the loan program you are using.
FHA Loans (HUD Guidelines):
For FHA loans, it is usually required that a non-occupying co-borrower must be related to the primary borrower by blood, marriage, or law (such as a close family friend who has had a long-standing relationship with the borrower and may qualify under specific circumstances). However, this rule may have some exceptions depending on certain factors presented to an underwriter at the time of submission. If they can make a good case for themselves and their relationship with applicant[s], then sometimes the lender might go along with it; otherwise, being related is normally necessary.
Conventional Loans (Fannie Mae and Freddie Mac Guidelines):
According to Fannie Mae or Freddie Mac guidelines, non-occupying co-borrowers do not have to be related to the main borrower. This means any individual with a strong financial background, including friends and business partners, could act as your non-occupying co-borrower. These programs tend to have more flexible relationship requirements compared to FHA loans.
Main Differences:
FHA Loans: Non-occupant borrowers generally need some blood, marriage, and legal tie, though this is not always true in all cases.
Conventional Loans: Fannie Mae & Freddie Mac will allow unrelated parties to serve as non-occupant borrowers if they so desire. Your friend would only qualify if they were related to conventional loans such as Fannie Mae or Freddie Mac. However, for an FHA loan, I would like them to have some kinship through blood, marriage, and legal ties. The underwriter may waive this requirement based on our lender’s flexibility.