Non-Occupant Co-borrowers on FHA Cash-out Refinance Transactions and Miscellaneous Updates

FHA recently clarified its policy regarding non-occupant co-borrowers on cash-out refinance transactions.

  • A non-occupant co-borrower cannot be added to a cash-out refinance transaction.
  • If the original transaction had a non-occupant co-borrower it is acceptable for them to stay on the cash-out transaction, however the loan must be downgraded to a manual underwrite and will be subject to manual underwriting guidelines and pricing.

Additionally the FHA Program matrix was updated with the following:

  • FHA condo project approval must be valid at time of case number issuance.
  • Clarified that a large deposit is defined as a deposit that exceed 2% of the appraised value on a refinance transaction and must be documented and verified if assets are needed to close.

If you have any questions, please contact your Account Executive.