If buyer is purchasing a owner occupant HUD Home and they have a non-occupant co-borrower there are rules that apply. This pertains to only FHA loans. (If buyer is doing a conventional loan or a loan other than FHA – a non-occupant co-borrower is not allowed.)
This is the policy for owner occupant transactions involving a non-occupant co-borrower. This is allowable only on FHA insured owner occupant sales, where an owner occupant is required to have a co-borrower that meets FHA underwriting requirements.
· The non-occupant co-borrower may have their name placed on line #2 of the sales contract.
· The sales contract should reflect that it is an owner occupant transaction.
· The non-occupant co-borrower does not sign the sales contract or any addendums.
· The non-occupant co-borrower is reflected on the prequalification letter.