Loan Modification

FHA Loans Help Single Borrowers

By Gina Pogol

The days of waiting until you are married to buy a home are over. Today, about a third of home purchases are made by singles. According to real estate firm Coldwell Banker, however, it is getting more common for singles to purchase their homes with another co-buyer. In fact, 13% of them buy homes with other purchasers, and half of these folks co-own with their parents.

Co-buyers of property when they won’t both be living in the home have a few options for financing. The purchase can be classified as investment property, but then down payment requirements are higher and the risk-based fees can be prohibitive. It can be financed as a primary residence with both borrowers on the loan, but only the income of the buyer living in the home can be used to qualify. Or it can be financed with an FHA mortgage to 96.5% of the purchase price.

Both occupying and non-occupying borrowers and co-borrowers

• take title to the property at settlement
• are obligated on the mortgage note, and
• must sign all security instruments.

The non-occupant co-borrower must have a principle residence in the United States. Non-occupying co-borrowers can only finance 75% of the purchase price unless they are related by blood, marriage, or law, such as:

• spouses
• parent-child
• siblings
• stepchildren
• aunts-uncles, and
• nieces-nephews, or
• unrelated individuals that can document evidence of a family-type, longstanding, and substantial relationship

Full post as published by FHA Mortgage Guide on July 20, 2010 (boomark / email).