If 2 people jointly buy a house 1 will be occupying the other will not; does this effect the mortgage rate does it qualify for owner occupied rates?

Asked by mkstar_2000, 85022 Thu Jan 10, 2013

Who would claim the tax benefits for Mortgage interest deduction the one occupying the residence or would it split?
If not qualified for owner rate is it a blended rate or investor rate? Can this be done with Homepath/FHA loans? The person occupying the house would qualify for FHA / Homepath if doing on own but cant qualify without addl income.

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Spiro Kontos…, , 19406
Mon Sep 15, 2014
The interest rate would be the same if there is a non-occupying co-borrower. It can be done with FHA but not Homepath.
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Dexter B. Ad…, , 19401
Thu Jan 10, 2013
Mkstar, interesting scenario for sure. To answer your main question(s): yes you can qualify for Owner-occupied rates (using a non-occupant co-borrower). Of course, as you can tell from the other answers, there are some hoops and hurdles.

As for the question of tax deductibility of property taxes and mortgage interest, you can never go wrong asking a tax professional FIRST, then finding a good mortgage consultant to walk you through the financing. We'd be glad to help.

Dexter Adriaanse
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Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Thu Jan 10, 2013
HomePath is a Fannie Mae loan program and is OK with a "non-occupant co-borrower" but the co-borrowers income cannot be included to qualify - so the occupant borrower's income would have to qualify on their own. HomePath permits investor financing, so in that situation, like Alan said, the interest rate would be an investor/higher interest rate.

FHA allows a non-occupant co-borrower and will include their income in qualifying. However the non-occupant co-borrower needs to be a family member (spouse, parents/children, sibling, stepchildren, aunts/uncles, nieces/nephews) otherwise the maximum loan-to-value is 75%.

Shane Milne | Lending in all 50 states | NMLS #81195
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Alan Openshaw, Mortgage Broker Or Lender, Southampton, PA
Thu Jan 10, 2013
Hello Mkstar,

If it is an FHA loan you can have a non occupant coborrower and it will not affect the rate.
If it is a conventional loan, if two people buy the house and the occupant is the only one on the note the rate will not be affected. If both are on the note the rate will be higher as it will be considered an investment property. Not a blended rate but the investor rate
Who gets to claim the mortgage interest deduction? I have a client who has a mortgage on a home and a family member pays the mortgage and claims the tax deduction even though they are not on the note. As for who gets to claim the real estate taxes as a deduction, the IRS says it is the person that paid them.
Yes it can be done with FHA....not sure about homepath.

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