Do You Need A Co Signor For Your Arizona FHA Loan?
What is an FHA Loan Co-signor? What is a Co-borrower?
And do I need one for an FHA Loan?
People ask me this question all the time, especially the new home buyer. So let’s take a few moments and briefly review the differences between a co-signor and a co-borrower.
Hopefully this little bit of information will help you in the event you are considering using one for your Arizona home purchase.
A Co-Borrower is a person who signs all of the FHA Loan documentation, signs the note and the security instrument and will take title to the property along with the primary borrower. The co-borrower will be subject to review of income, assets, liabilities and credit history in order to determine their credit worthiness.
A Co-Signor will not take title to the property, but is liable for repayment of the FHA Loan obligation. The co-borrower will sign all of the documents with the exception of the security instrument. Just like a co-borrower, the co-signor must complete a loan application and be subject to review of credit worthiness.
Neither a co-borrower nor a co-signor may be a party who has a financial interest in the transaction such as a builder, seller, real estate agent, etc.
The individual signing the loan application must not be ineligible for getting an FHA Loan if there was not a co-signor or co-borrower.
Any time there is a non-occupying co-borrower or co-signor, that person must have a primary residence within the United States. The FHA Loan does grant an exception to this for military co-signors or co-borrowers.
Keep in mind that there is a big requirement for the down payment when a non-occupying co-borrower or co-signor will be on the loan. In that instance HUD allows a maximum loan amount of 75% of the purchase price.
So using a co-signor or co-borrower could be a useful tool for someone trying to build credit and has access to funds for a sizable down payment from family.
I hope you found this Arizona Home Loan tip useful and would love to hear your comments.
To find out if you qualify for an FHA Loan call (520) 225-0380 or click on the Get Started on FHA tab above and ask for a quote. If you want to go ahead and get your application in, you can fill out my Home Loan Application Online here.
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