A party who has a financial interest in the mortgage transaction, such as the seller, builder or real estate agent, may not be a co-borrower or a cosigner. Exceptions may be granted when the party with the financial interest is a family member.
For non-occupying borrower transactions, the maximum LTV is 75 percent. The LTV can be increased to a maximum of 96.5 percent if the borrowers are family members, provided the transaction does not involve:
- a family member selling to a family member who will be a non-occupying co-borrower; or
- a transaction on a two- to four-unit property.
A family member is defined as follows, regardless of actual or perceived sexual orientation, gender identity, or legal marital status:
- child, parent, or grandparent;
- a child is defined as a son, stepson, daughter, or stepdaughter;
- a parent or grandparent includes a step-parent/grandparent or foster parent/grandparent;
- spouse or domestic partner;
- legally adopted son or daughter, including a child who is placed with the borrower by an authorized agency for legal adoption;
- foster child;
- brother, stepbrother;
- sister, stepsister;
- aunt; or
- son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law of the borrower.
For additional information see Handbook 4000.1 II.A.1.b.ii.(A); II.A.2.b.ii.(B); II.A.2.b.i.(C) available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh