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Can a non-occupant co-borrower be added to a FHA mortgage loan to help qualify a loan applicant?

Answer

It is permissible to add a non-occupant co-borrower or co-signer to a purchase or a rate/term refinance transaction.
However, if the occupant borrower has not established a credit score (insufficient or non-traditional credit history), the credit score of a non-occupant co-borrower/co-signer may not be used to meet FHA mortgage guidelines. Borrowers with non-traditional credit and insufficient credit histories must be evaluated according to the requirements in Handbook 4155.1 4.C.3 and 4.A.1.f
In such cases, the loan application is not to be processed through the FHA TOTAL Scorecard (as required for loans where the borrower has no credit score or is "unscoreable"); and is to be referred to the DE underwriter for credit underwriting analysis/review.
If the application is inadvertently submitted to TOTAL, and the loan is closed, the lender must delete the non-occupant co-borrower's FICO in the FHA Connection in order to proceed with the FHA insuring process.

Handbook 4155.1 4.C.3, 4.A.1.f; HUD policy determination

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