Whether youre a first-time homebuyer, moving to a new home, or want to refinance your existing conventional or FHA mortgage, the FHA loan program will let you purchase a home with a low down payment and flexible guidelines.580 Credit Score- and only -3.5% Down RELATED ARTICLES
FHA loan limits were established to define how much you can borrow for a HUD-backed mortgage. Each state has different limits, so be sure to look up your state to understand what is available for your FHA home loan.
For , the FHA floor was set at $498,257 for single-family home loans. This minimum lending amount covers most U.S. counties. The FHA ceiling represents the maximum loan amount and is illustrated in the table below.
Also for 2024, the FHA ceiling was set at $1,149,825 for single-family home loans. This represents the highest amount that a borrower can get through the FHA loan program. It applies to high cost areas in the United States and is illustrated in the table below.
Paying the upfront costs of buying a new home can be challenging. To help overcome this hurdle, many local and state agencies offer down payment assistance in the form of grants or second mortgages.
Getting an FHA loan with a co-borrower can make homeownership more affordable and attainable FHA loans allow for lower down payments and credit scores compared to conventional loans Adding a co-borrower can further improve your chances of qualifying,
But there are specific FHA guidelines and requirements when applying with a co-borrower. This comprehensive guide covers everything you need to know.
Who is Eligible to be a Co-Borrower on an FHA Loan?
The FHA allows the following individuals to be co-borrowers on an FHA mortgage
- Spouses
- Children
- Parents
- Siblings
- Other family members
- Unrelated people
Both the borrowers and co-borrowers must take title to the property and sign the mortgage note.
Ineligible Co-Borrowers
The FHA prohibits certain parties from being co-borrowers if they have a financial interest in the sale or financing of the property:
- Real estate agents
- Builders
- Sellers
The one exception is if the co-borrower is a family member.
All co-borrowers must have a valid social security number and take occupancy of the home as their primary residence. Non-occupant co-borrowers must be US citizens or have permanent residency status.
FHA Co-Borrower Credit Score Requirements
With an FHA loan, the middle credit score of all borrowers is used to determine qualification. Here are the minimum credit score requirements:
- 580+ – Eligible for maximum financing
- 500-579 – Limited to 90% LTV financing
- Under 500 – Ineligible
If one co-borrower has a score above 580, but the middle score is below 580, the max LTV will be capped at 90%.
The FHA does allow non-traditional credit for borrowers with limited or no credit history. Non-traditional credit guidelines are outlined in HUD Handbook 4155.1 4.C.3.
FHA Co-Borrower Income Requirements
The income of all borrowers and co-borrowers is used to determine the debt-to-income (DTI) ratio. Combined income from all parties is used to qualify for the loan.
FHA loans require a maximum DTI of 55% with an automated underwriting system (AUS) approval. Manual underwriting allows for 57% DTI.
All co-borrower income must be documented with standard verification methods like pay stubs, W-2s, and tax returns.
Gifts and secondary financing can also be used for down payment and closing costs, whether from co-borrowers or third parties. The FHA allows gifts from:
- Family members
- Employers or unions
- Charitable organizations
- Government agencies
- Certain creditors and other sources
Gifts must be documented with a gift letter.
Occupying vs Non-Occupying FHA Co-Borrowers
FHA guidelines differentiate between occupying and non-occupying co-borrowers:
Occupying Co-Borrowers
An occupying co-borrower will take title and live in the home as their primary residence. Occupying co-borrowers enjoy full FHA eligibility.
Non-Occupying Co-Borrowers
A non-occupying co-borrower takes title but does not live in the home. They are still obligated on the mortgage note but do not occupy the property.
Non-occupying co-borrowers must be either a US citizen or have permanent residency status. Other eligibility requirements depend on whether it is a purchase or refinance:
Purchase
- Must be related to the borrower by blood, marriage, or law
- Can only be used to meet credit score requirements
Refinance
- No relation to borrowers required
- Can be used for credit score and qualification
Non-occupying co-borrowers may make large cash contributions for down payment and closing costs. But gifted funds limits still apply.
Other FHA Co-Borrower Guidelines
Here are some other key guidelines when applying for an FHA loan with co-borrowers:
- The income and debts of non-purchasing spouses in community property states must be included, even if they aren’t co-borrowers
- Co-borrowers cannot be a business or artificial entity, like a trust or LLC
- The number of co-borrowers cannot exceed 4 total parties
- All co-borrowers must sign the initial Uniform Residential Loan Application
Be sure to consult with a knowledgeable FHA lender who can guide you through the co-borrower requirements. While co-borrowers can be beneficial, there are pitfalls to be aware of. An experienced lender will know all the ins and outs of FHA co-borrower guidelines.
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Whether youre a first-time homebuyer, moving to a new home, or want to refinance your existing conventional or FHA mortgage, the FHA loan program will let you purchase a home with a low down payment and flexible guidelines.580 Credit Score- and only -3.5% Down RELATED ARTICLES
FHA loan limits were established to define how much you can borrow for a HUD-backed mortgage. Each state has different limits, so be sure to look up your state to understand what is available for your FHA home loan.
For , the FHA floor was set at $498,257 for single-family home loans. This minimum lending amount covers most U.S. counties. The FHA ceiling represents the maximum loan amount and is illustrated in the table below.
| FHA Limits (low cost areas) | |||
| Single | Duplex | Tri-plex | Four-plex |
|---|---|---|---|
| $498,257 | $637,950 | $771,125 | $958,350 |
Also for 2024, the FHA ceiling was set at $1,149,825 for single-family home loans. This represents the highest amount that a borrower can get through the FHA loan program. It applies to high cost areas in the United States and is illustrated in the table below.
| FHA Limits (high cost areas) | |||
| Single | Duplex | Tri-plex | Four-plex |
|---|---|---|---|
| $1,149,825 | $1,472,250 | $1,779,525 | $2,211,600 |
Paying the upfront costs of buying a new home can be challenging. To help overcome this hurdle, many local and state agencies offer down payment assistance in the form of grants or second mortgages.
FHA Loan Programs for 2024
The most recognized 3.5% down payment mortgage in the country. Affordable payments w/good credit.
FHA video #5 Number of Borrowers on an FHA loan, with a co-borrower or a co-signer.
Can a co-borrower get an FHA loan?
A co-borrower – whether they be a non-occupying co-borrower or a more traditional co-borrower who lives on the property – can often help those with a fairly low credit score or somewhat high debt-to-income ratio (DTI) qualify for an FHA loan. This makes co-borrowers attractive to younger home buyers and those looking to rebuild their credit.
Can I add a non-occupying co-borrower to my FHA loan?
Another perk of the FHA loan is the low down payment option. Depending on your qualifications as a borrower, you may only have to put down 3.5% on a mortgage. But if you want to add a non-occupying co-borrower to your application and still pay only 3.5% down, the co-borrower must be considered a ‘family member’ by the FHA.
What are the FHA loan requirements?
FHA loan requirements include a minimum credit score of 500 as well as limits on your total monthly debt load. Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page.
Should I use a co-borrower or cosigner for my FHA loan?
Having a co-borrower or cosigner may improve the FHA loan applicant’s chances of getting approved for the mortgage. Using a them is also a way for a borrower with established credit to help a less established co-borrower become a homeowner under the proper circumstances. But what’s the difference between a cosigner and a co-borrower?