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Hi there,
I currently own a home that has an FHA Loan. My fiance and I want to move to a bigger house. Currently we cannot sell our home because we will not get the full amount we want, so we are going to rent it. The problem we have is that I cannot get another FHA loan but only a conventional loan which requires atleast 5% or more down. We currently do not have the down payment unless I borrow from a CC which I do not want to do.
My question is, can my Fiance be the primary borrow and get an FHA loan and I be the co-signer? This way we have to be 3% or no money down. The reason I need to be the co-signer is so that we can get the house we want since my salary is twice as hers. Would lenders allow us to do this?
First, even if you borrow from a credit card you have a problem. Most government and conforming programs do not allow a "cash advance" to be used for a down payment. They will request your down payment funds to be sourced/seasoned and as soon as they see that its from a credit card its a huge red flag. It doesn't inspire confidence that to get into the home took a cash advance and adds risk.
If you are a co-borrower then your debts, income and credit will be considered just as if you were the borrower.
Why do you need to sell your house to buy a new one with FHA? FHA does allow you to buy a new one if you currently have another FHA loan... but there are restrictions. The main thing is they don't want the new home to be an "investment" home in disguise. If you are relocating for work or if its an upgrade/downgrade for a family change that can be documented many underwriters will allow it.
Of course you have to show them a lease on the current home and meet the other requirements. FHA allows you to own more than 1 home at a time, but you MUST be buying the home as a primary residence.
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