What Is a Non-Occupant Co-Borrower?

Short answer

A non-occupant co-borrower is someone who signs the mortgage note and shares full liability for the loan but does not live in the home, often a parent helping a child buy. On a conventional loan, Fannie Mae allows up to 95% LTV with a non-occupant borrower when the loan is approved through DU, or 90% when manually underwritten (as of October 2026). Their income and debts both count toward qualifying.

Definition

A credit applicant on a primary-home loan who does not live in the property. Per Fannie Mae, they sign the note, are jointly liable, and may or may not be on title. A co-signer or guarantor is similar but is not on title.

Worked example

Example only, not a quote: a daughter earns $4,000 a month and her new housing payment plus debts would be $2,500, a 62.5% DTI on her own. Her mother joins as a non-occupant co-borrower with $6,000 a month of income and $2,000 of her own debts, including her own home. Combined, that is $4,500 of debt on $10,000 of income, a 45% DTI. Fannie Mae's DU can go up to 50%, so the file may qualify, subject to DU findings and credit approval.

Fannie Mae rules

Per Fannie Mae Selling Guide B2-2-04 (as of October 2026):

• Allowed on purchases, limited cash-out and cash-out refinances of a primary home
• The person cannot have an interest in the sale, so not the seller, builder or real estate agent
• DU loans: up to 95% LTV/CLTV with a non-occupant borrower
• Manually underwritten loans: up to 90%, the person living in the home must put in the first 5% of the down payment from their own funds (with exceptions, such as 80% LTV or less), and using only the occupant's income, DTI cannot exceed 43%

This works on conventional loans. See DTI for how both people's debts are counted.

FHA loans

FHA loans also allow non-occupying co-borrowers under HUD Handbook 4000.1. FHA's maximum LTV depends on things like whether the co-borrower is a family member and how many units the property has, so we confirm the current HUD limit for your exact file before you make an offer. Rates vary daily; call for today's pricing.

In South Florida

In Miami it is common for parents to help adult children buy, or for children to help parents. A non-occupant co-borrower can make that work, but it is a full legal debt for them: the payment shows on their credit and counts in their DTI for any future loan. Since only the person living there can claim the Florida homestead exemption on that home, talk to your title company or attorney about how title should be held.