FHA Loan Articles
News, updates, and explanations to keep you informed.
The Difference Between a Co-borrower and a Co-signer
If you're applying for an FHA home loan, you aren't forced to apply and be responsible for the debt all by yourself--FHA rules allow a co-borrower or co-signer to apply alongside the borrower.
Having a co-borrower or co-signer may improve the FHA loan applicant's chances of getting approved for the mortgage. Using a co-borrower or co-signer is also a way for a borrower with established credit to help a less established co-borrower become a home owner under the proper circumstances.
But what's the difference between a co-signer and a co-borrower? Do they have the same rights and responsibilities?
In the eyes of the FHA and your lender, these are two separate things. Co-signers don't have the same benefits as co-borrowers, though they may share the same responsibilities in many cases.
The FHA official site says, "Co- borrowers take title to the property and are obligated on the mortgage note and must also sign the security instrument. The co-borrower's income, assets, liabilities, and credit history are considered in determining creditworthiness."
That isn't the same as the FHA requirements for a co-signer, who does not have interest in the property purchased with an FHA insured mortgage. Even so, the co-signer does have responsibility on the loan.
The FHA states, "Co-signers do not hold ownership interest in a property, but are liable for repaying the obligation and must sign all documents with the exception of the security instruments. The co-signers income, assets, liabilities, and credit history are considered in determining creditworthiness for the mortgage and the co-signer must complete and sign the loan application."
Co-borrowers or co-signers cannot have financial interest in the property--meaning they can't own the property or borrow with the owner. The same rule applies to the builder, real estate agent, any "interested parties" that could profit from the sale of the home.
That said, the FHA does provide an exception to this rule, which states;
"Exceptions may be granted if the seller and co-borrower/co-signer is related to the owner by blood, marriage or law."
FHA NEWS and RELATED ARTICLES
Some borrowers come to the FHA loan process with a long credit history, while other borrowers are just getting started. Is it possible for a borrower be turned down for an FHA loan because of a lack of credit history?
The FHA Reverse Mortgage, also known as Home Equity Conversion Mortgages or HECM loans, is designed for those aged 62 and older who own their home outright or have few payments left on the mortgage.
When the Department of Housing and Urban Development announced the FHA’s Back to Work program, it was very good news for any potential FHA loan applicant who may have experienced previous financial hardship as a result of the recession.
When you apply for a new purchase FHA home loan, FHA loan rules say you must list your income and employment details. This lets your loan officer accurately determine your debt-to-income ratio, using calculations based on your verifiable income.
Do you need to buy a home using an FHA loan, but one that is out of town or out of state? The Department of Housing and Urban Development has created a new tool to help FHA loan applicants and anyone else looking for a home loan.