Is it possible to get an FHA loan with three unrelated people?

Question

Three friends are planning to purchase a house. One of these is a realtor who does not want to be on the mortgage because he has the lowest documented income, and says that lenders will not provide an FHA loan to more than 2 people. Does this make sense? My understanding is that FHA is federally backed mortgage insurance, and I don't understand why they would limit the number of people that could be on a mortgage.

Answer 1

There is no such rule.  I have done FHA (& Conventional) loans with 4 people.  If a co-borrower is not going to occupy the home then you have a different set of standards.  If not a family member, then you would have to put 25% down.  Maximum financing is available if non-occupying co-borrower is related by blood, marriage, or law; or if unrelated, individuals must document a long-standing family-like relationship.

The key here is are you all going to occupy it?  Anyone can be put on the deed after the closing, but why would you put someone on the deed who is not obligated on the mortgage?

Answer 2

FHA rule changes are not always voted on by Congress or even published in the paper.  They show up in the FHA guideline booklets that every mortgage company "underwriter" keeps at her desk.  Call any lender and ask if the underwriter says 3 can go on the deed.   A few years ago you could do this.  No restrictions.  I know because a lot of unmarried couples bought with FHA and that's 2 people who are unrelated.

Answer 3

As a former FHA Underwriter, your Realtor-friend is a scam artist as well as a liar.

First of all, buying a house with 3 other people--that is a H-U-G-E mistake.

It's a 30-year legal contract, not an apartment.  

I have personally done an FHA loan with FOUR borrowers, and your Realtor friend is trying to get on the title without being legally obligated on the mortgage note to pay anything--nice little deal he/she is trying to cut for themselves.

Your friend is lying and what you need to do, is ONE of you needs to buy the house and the rest move in as roommates.

If one of you can't afford to do that, then don't buy house.

I have never, ever in my career seen a situation like that work out.