What is a Non Occupant Co Borrower?

A clip board with an application and the words loan with cosigner written across the topMortgage finance might incorporate non-occupant co-borrowers, which can be vital to homebuying. For conventional and FHA loans, this guide discusses non-occupant co-borrowers.

This comprehensive resource covers non-occupant co-borrower standards, qualifications, and requirements. It discusses the differences between non-occupant co-borrowers and co-signers and their effects on mortgage applications.

This tutorial helps you navigate non-occupant co-borrowing, whether considering a HomeReady or Home Possible loan or Freddie Mac and Fannie Mae rules.

Key Takeaways on Co-Borrower Requirements

  • A co-borrower shares equal responsibility for the mortgage with the primary borrower.
  • Co borrowers must document income/assets and meet minimum credit standards. 
  • Non-occupying co-borrowers can help qualify, but most have relationship limits.
  • Co borrowers must be obligated on the note; co-signers provide just a signature.
  • Adding a co-borrower can help you be eligible for a more significant loan amount and better rates.

Understanding co-borrower options, obligations, and lender guidelines is critical to getting a mortgage with help. This allows you to leverage their support while properly meeting compliance requirements.

What is a Co-borrower on a Mortgage? 

A co-borrower is any additional party, besides the primary borrower, responsible for repaying the mortgage loan. Both borrowers' names are on the mortgage, and they share equal rights and obligations to the property.

Common mortgage co-borrowers include:

  • Spouses - Husband and wife co-owning and occupying the home
  • Partners - Unmarried couples jointly qualifying for and liable for the loan 
  • Parents - Often added to help kids qualify with their income/credit
  • Siblings or family members - Closely related co-borrowers helping each other 
  • Investors - Multiple borrowers purchasing an investment property together

How Co-Borrowers Impact Mortgage Qualification

The main reason to add a co-borrower to a mortgage application is to improve loan qualification chances. Ways co-borrowers can help buyers get approved include:

  • Meeting income requirements - Combining multiple incomes to qualify 
  • Improving debt-to-income ratio - Increasing total income lowers DTI
  • Boosting credit score - Raising overall average credit score
  • Adding assets - Combining savings and reserves

For applicants falling slightly short in one area, an eligible co-borrower can provide the needed boost to get mortgage approval. Their income and credits become part of the full underwriting review.

Co-Borrower Requirements: Credit, Income & Qualifications 

For a co-borrower to help you qualify for a mortgage loan, they must:

  • Have a valid Social Security number and documented income/assets
  • Meet minimum credit history and score requirements per the lender and loan program 
  • Be equally liable and obligated to repay the mortgage with the other borrowers
  • Sign the mortgage note, loan application, and other legal paperwork
  • Go through full underwriting and provide all required financial documentation

Co-borrowers must fully commit to the long-term mortgage obligation like the primary borrower.

Can Co-Borrowers Be On Title Only?

Borrowers cannot be added to the property title without being obligated on the mortgage note. Lenders will require any party on the title to provide all documentation, undergo credit evaluation, and be liable for the debt.

The only exception is someone added to the title by will or inheritance who is not a mortgage borrower. In all other cases, names on the title must match borrower names on the loan docs.

Non-Occupant Co-Borrowers Explained

A non-occupant or non-occupying co-borrower does not live in the mortgaged property but helps qualify for the loan. They must still be obligated on the note and meet all co-borrower credit and documentation requirements.

Common examples include parents co-signing a child's mortgage to help them qualify or a partner not yet moving into the home. As with standard co-borrowers, they share responsibility for the debt.

Co-Borrower Rules and Guidelines

When applying for a mortgage with co-borrowers, essential guidelines include:

  • FHA - Allows non-occupant co borrowers, including interested parties like parents/relatives 
  • VA - Does not permit non-occupying co borrowers for VA loans
  • Fannie Mae - Allows relatives as non-occupant co borrowers on low down payment loans
  • Freddie Mac - Requires non-occupant co borrowers to be relatives or domestic partners

So, most lenders will permit non-occupying co-borrowers, contingent on meeting relationship requirements. Know the specific rules before assuming you can add certain co-borrowers.

Co-Signers vs Co-Borrowers: Key Differences

Co-signers and co-borrowers sound similar but have distinct differences when it comes to mortgages:

  • Obligation - Co borrowers must fully commit; co-signers may leave after closing
  • Occupancy - Co borrowers may live in homes; co-signers usually do not
  • Documentation - Co borrowers fully document; co-signers may provide limited info
  • Creditworthiness - Co borrowers underwritten; some co-signers sign
  • Mortgage rights - Co borrowers retain all ownership rights; co-signers may relinquish 

So, co-signers provide just a signature while co-borrowers share full responsibility. Co-borrowers provide maximum help qualifying.

The Benefits of Adding a Co-Borrower

Adding an eligible co-borrower can offer significant benefits like:

  • Increased borrowing power and higher loan amount options
  • Meeting income requirements for mortgage approval 
  • Lowered debt-to-income ratio to qualify for better rates
  • Improved credit score to get approved and receive discounted rates
  • Reduced need for mortgage insurance with higher down payments  
  • Lower monthly payments split between multiple borrowers

For applicants right on the cusp of approval, a co-borrower can provide just enough boost to secure financing.


In summary, whether a borrower is applying for a conventional or FHA loan, navigating the complexity of mortgage financing requires an awareness of the dynamics of non-occupant co-borrowers. This guide has examined the subtleties of non-occupant co-borrower agreements and clarified requirements, rules, and differences from co-signers.

Knowing about co-borrowers who are not owners of the home may affect your mortgage choices, regardless of whether you are thinking about Freddie Mac, Fannie Mae, or specific programs like HomeReady and Mortgage Possible. It is now clearer if a non-occupant co-borrower must be included on the title and what credentials are required for certain loans, such as HomePath.

Equipped with this understanding, borrowers may adeptly maneuver through the complexities of co-borrower non-occupant situations, guaranteeing a more seamless journey towards homeownership.

Guarantors, Co-signers, or Non-occupant Borrowers

Recommended Reading

Frequently Asked Questions about Conventional Loans
How Much Down Payment for a Conventional Loan?
The Benefits of a Conventional Loan
Conventional Loan Guidelines: Debt to Income Ratio Explained