Can my sister co-borrow with me on a conventional loan if it will not be her primary residence?

Yes, that is possible James. Conventional will likely be your best option as long as you both have strong credit and your combined debt ratio's are not excessive for a conventional loan. If either of you has a middle score below 680 you will likely be better off with a FHA loan.

Also, plan on at least 5% as a downpayment which must be your own funds. If you are putting 20 % or more down it can all come from your sister or gift funds

She can, but fha is more forgiving in this situation

Yes, get pre-qualified with a local loan officer and they can show you how to set it up correctly. You will also need to have 5% of your own funds in the deal.

In theory, yes... You can live there, and she doesn't have to live there. Conventional loans will require at least 20% down payment for this situation, but other than that... not really an issue. If you'd like to do it with less down payment, an FHA loan allows this situation with as little as 3.5% down payment. Contact a local Indiana mortgage broker for more information

Hi James, call me about your situation I am with First Merchants Bank down here in Indianapolis. This requires a little more discussion that would go faster over the phone rather than this forum. I can be reached at 317-566-6129