There are plenty of situations that come up when more than one person wants to borrow on an FHA home loan, but there are just as many circumstances where two people may want to own a property purchased with an FHA mortgage, but only one of the two is applying for the loan itself. FHA loan rules for this are found in HUD 4155.1 Chapter Four under the heading, “Title Issues Regarding Non- Borrowing Spouses or Other Parties in Interest”. The rules here state: “If two or more parties have an ownership interest in the property, but only one of the parties is applying for the loan (and credit qualifies for the loan on his/her own), it is not required that the non-applicant individual(s) execute the mortgage note and security instrument.” That means the borrower will be the only signing party on the mortgage under FHA loan rules, but Chapter Four adds an important caveat to this, reminding borrowers and lenders alike that state laws regarding these arrangements must also be recognized. “The lender is still required to ensure a valid and enforceable first lien on the property under applicable state law, which may require the execution of the security […]
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