Home Buying in 95834>Question Details

adamk135, Home Buyer in Chicago, IL

I am trying to buy a house and will be going the FHA route. Can i use my sister, who has no FICO score, as a non-occupant co-signor?

Asked by adamk135, Chicago, IL Sun Nov 25, 2012

I have a median FICO score in the 690's. The only thing stopping me from getting the house is my Debt-to-Income ratio. My sister has no FICO score due to lack of credit history. She lives with our mom and has no debts. She works full time and has been at her job for more than 2 years.

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Sue Archer’s answer
There's more implications than you mention here if your sister co-signs for the home. First, she needs to establish a credit score. She can possibly do that with non-traditional means such as cell phone bills, rental payment receipts and things like that. And it's in her best interest to establish credit history. Most lenders can help her, or she can contact Blue Water Credit and ask them to help her.

But co-signing on a mortgage for you is not normally in her best interest. She takes on 30 years worth of obligation for a debt that she does not get the benefit of enjoying. 30 years is a long time,and should you at any time default on that loan, it would reflect negatively on her. In fact, she would be expected to pay it back should you not be able to pay. Should she EVER want to get a home of her own, she would be showing 100% obligation on your mortgage and have difficulty getting one for her own.

You might want to consider whether there is another alternative, or discussing the full implications of her co-signing so that it's clearly understood.
1 vote Thank Flag Link Sun Nov 25, 2012
This would be a temporary thing. Something i didn't mention was that i have a husband. We were all set to close on the house, but he got laid off just prior to us closing. He is collecting unemployment. This mortgage would be less than what we are currently paying for rent. So yes, we will have more than enough income to afford the mortgage but he cannot be on the loan due to no employment. My sister's income will be enough to bring our DTI into optimal range. We would then refi her out of the mortgage once my husband gets a new job and establishes the required employment service time per FHA standards (so probably 2 years). I can't see how this can hurt my sis's credit considering she has none. I just need to know if it is possible to use her. She understands all the risks involved. thanks
Flag Mon Nov 26, 2012
This is tricky for some lenders, but we can manually underwrite files. That means we don't have to have a AUS Approval (automated underwriting system) in order to fund a loan. Also, keep in mind that a co-borrower for a FHA does not have to live with the borrower. It's something very few people know. Please do not fall prey to some lenders who say this is an easy deal. These are complicated and we have to tackle some key issue upfront so you don't blown out of escrow. Please make sure you choose an experienced Loan Officer with a history of happy customers. FYI, there are some pretty cool programs out there, especially if you are going to buy in CA as your zip code indicates. We are licensed in 18 states.

Best of Luck!

Web Reference: http://www.AFN-Loans.com
0 votes Thank Flag Link Mon Apr 22, 2013
Hi Adam

This is definitely a question for your lender.
0 votes Thank Flag Link Mon Apr 22, 2013
Check with a local lender about the FHA rout.
0 votes Thank Flag Link Mon Apr 22, 2013
Perhaps, but this should be a consideration discussed with your lender.
0 votes Thank Flag Link Sun Dec 23, 2012
I'd love to help you. Please contact me and we can discuss your options. (916) 236-5686 or email me at tsigngh@aresrealty.com.
0 votes Thank Flag Link Fri Nov 30, 2012
Co-signing aside, and Sue made some excellent points, you might also want to consider your disqualifying factor -- your debt ratio. The reason lenders impose restrictions on debt ratios is because they prefer to lower their risk by lending to people who have plenty of disposable income.

If you owe a lot of bills, you generally don't enjoy disposable income. Without disposable income, any minor financial blip that pops up -- and when owning a home, there are lots of unexpected expenses that can happen -- can wreak havoc on your finances. The lender wants to make sure it's not a huge hassle for you to pay them each and every month of your home ownership.

Not to mention, you don't need the headache of worrying how you're going to make your mortgage payment when you need to pay for other things besides a roof over your head. You might want to consider buying a less expensive home while you continue to pay down your debt and / or work on finding a new job that pays more (but we all know how that goes these days).
0 votes Thank Flag Link Mon Nov 26, 2012
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