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How Do You Qualify for a USDA Loan if You Have Co-Signed Accounts?

June 13th, 2014 by Sean Stephens

Can you qualify for a USDA Loan if you have co-signed accounts?

What happens when you try to help a friend or family member buy a car, or maybe they need help in taking out a loan? Well, it could very well hurt your ability to qualify for a mortgage, but USDA guidelines can help in these specific situations.

This short video tip will explain the details to keep you in the know, so without further delay let’s get started.

Per USDA Guidelines, the following applies in situations where debts have been co-signed by the applicant for another party:

  1. They are to be considered in the debt ratio unless the applicant provides evidence that it has not been necessary for them to make the payments over the past 12 months.
  2. Acceptable evidence includes canceled checks, money order receipts and/or bank statements of the co-obligor or other third party.
  3. If any late payments are reported for the previous 12 months the liability must be included.
  4. Debts identified as “Individual” must always be considered in the debt ratio, regardless of who is making the monthly payment as the legal obligation resides with the applicant.

In summary, USDA guidelines can be flexible in situations with co-signed accounts, but there must be at least 12 months of payment history, no late payments, and have proper documentation to support who has made the payments.

This is a unique guideline specific to USDA loans, so be certain you are working with a mortgage professional that is well versed and deeply engrained with the inner workings of this complex loan program. As an approved USDA lender, we are experienced with these situations and are here to help guide you through the process.

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