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@Cromew wrote:
I have good income and almost no debt (less than 2% DTI), but I am recently out of college and my short credit history is hurting my ability to qualify for a loan. My parents want to help, but their DTI is already at about 40%. I am not sure how cosigning will work in this case. If they make a combined $100k and I make $100k, our combined DTI would surely be below 35%, but would the loan officer split our incomes to determine DTI?
Any one on the loan would be a co-borrower (not co-signor), and yes total combined income to determine DTI.
Short credit history? Do you have a score? Is your credit at least 12 months old? Do you have a few accounts on credit history? Have you been paying rent while going to college? Cell Phone bills? Electricity? Cable bill? Things of that nature.
I guess I dont know what Im talking about.....
FHA Guidelines Section 606.02 Non-Occupying Owner Borrowers, states: (Says Borrower not co-signor)
“When there are two or more borrowers, but one or more will not occupy the property as a principal residence, the maximum mortgage is limited to a 75% LTV. However, maximum financing (as described in sections 605 to 605.03) is available for borrowers related by blood, marriage or law (spouses, parent-child, siblings, stepchildren, aunts-uncles/nieces-nephews, etc.), or for unrelated individuals that can document evidence of the family-type longstanding and substantial relationship not arising out of the loan transaction.”
A Non-Occupying Borrower who is not related to the Occupying Borrower, requires a 25% downpayment.
I havent seen a lender use co-signors in a few years. I guess that actually doesnt mean they arent out there, but I havent used one. They have all required joint applicants to be co borrowers.
It still holds true as a co borrower, or co signor, both incomes would be calculated with a FHA 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.”