A father and daughter making cookies

There are times when we need a little help getting started in life. Doing something like adding your child’s name to your credit card can help them build credit quickly if you pay it off every month.

It’s a big decision to cosign a loan for someone because you’re taking on a lot of responsibility if things go south. If you’re the one getting a mortgage with a cosigner, there are factors and restrictions that go along with the transaction.

The Responsibilities of Being a Cosigner

Cosigning can really help someone out, but it’s also a big responsibility. When you cosign for someone, you’re putting your name and credit on the line as security for the loan.

If the person you cosign for misses a payment, the lender or other creditor can come to you to get the money. The late payment also shows up on your credit report.

Because cosigning a loan has the potential to affect both your credit and finances, it’s extremely important to make sure you’re comfortable with the person you’re cosigning for. You both need to know what you’re getting into.

Applying for a Mortgage with a Cosigner

Let’s say you’re looking to apply for a mortgage and you found a cosigner who’s willing to give you a little extra boost to help you qualify. While it’s definitely doable to apply for a mortgage with a cosigner who’s not occupying the property, there are some restrictions.

Whether or not you can apply with a cosigner will depend on the type of loan you’re trying to get. Non-occupant co-borrowers are most commonly seen on conventional loans and certain types of FHA loans.

Conventional Loan Requirements

In order to apply with a non-occupant co-borrower for a conventional loan, the cosigner has to sign the loan, but they don’t need to be on the title of the property. The co-borrower’s credit will be pulled, and the score will be used along with the occupying client to determine loan qualification.

With conventional loans, things start to diverge based on who owns the loan when looking at debt-to-income (DTI) ratios.

At Quicken Loans, the occupying client DTI ratio can only go up to 70% if a client has a down payment of 20% or less. If the down payment is greater than 20%, there’s no cap to the ratio. Different lenders may have different policies.

The non-occupying co-borrower’s income and debts are added to the housing expense- to-income ratio (HTI). A client’s HTI is the percentage of their monthly income that goes toward housing expenses including principal, interest, taxes and insurance. This also sometimes includes homeowners’ association dues. Taken together, these five elements of a mortgage payment make up the acronym PITIA.

FHA Loans

If you’re looking to get an FHA loan with a non-occupant co-borrower, there are a few other special restrictions.

First, you can have a maximum of two non-occupying co-clients. Their primary residence needs to be in the U.S. If you’re occupying the property, you can have a maximum DTI of 70% with a down payment or equity of less than 20%. If you have a higher down payment or equity stake, your DTI is unlimited. Finally, non-occupant co-borrowers are required to be on both the title and the mortgage.

In order to take full advantage of the FHA program and only bring a 3.5% down payment to the close, there are a couple of additional guidelines.

The property you’re buying must be a single-family residence. The non-occupant co-borrower must be a relative or a close friend as well. For the purpose of your mortgage, the following are considered relatives:

  • parent or grandparent (step, foster and adoptive)
  • child (step, foster and adopted)
  • sibling (step, foster and adopted)
  • aunts or uncles
  • spouse or domestic partner
  • in-laws

If the non-occupying co-client is a close friend, you’ll have to provide some extra documentation describing the length of your relationship and their interest in helping you.

There are a few instances in which you must have a down payment or an equity stake of at least 25%:

  • The non-occupying co-client is not family or a close friend
  • It’s a non-arm’s length transaction (the co-client is also the seller)
  • A two-unit property is being purchased

Before cosigning on a property with anyone, be sure you both understand what you’re getting into.

Do you still have questions about applying for a mortgage with a cosigner? Leave them in the comments below.

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This Post Has 180 Comments

  1. HI
    I would like to know what loan would apply best to my situation i am married but i would like to take out a loan by my self and use my mother as a non occupying co borrower so she can help me qualify for a higher loan amount and get the house that i want, my question is can i apply for a conventional loan with my mother or do i have to do an fha loan? would i benefit from lower rate from a conventional loan or an fha loan? and my last question will be for either the conventional loan or the fha loan do the lenders take into consideration my spouse debt even though he will not be on the loan we live in north carolina?

    1. Hi Ally:

      I’m going to take the rate part of that question first. Whether FHA or conventional rates are lower depends very much on your personal financial profile. That’s certainly something you can look at yourself when you get preapproved and see what makes the most sense for you. You can do a conventional loan or an FHA loan with your mother. It doesn’t matter. Your spouse’s debts wouldn’t be taken into account in North Carolina if he wasn’t on the loan because it’s not a community property state. I hope this helps! If you would like to go over your options for possible preapproval, you can start online with Rocket Mortgage or speak with one of our Home Loan Experts at (888) 980-6716.

    1. Hi Kimberly:

      With an FHA loan, the non-occupant co-client is required to be on the title. In that case, they would have the right to move in because it’s their house, too. With a conventional loan, they aren’t required to be on the title and they don’t have the right to move in if you don’t want them to. Hope this helps!

    1. Hi Nancy:

      You’ve come to the right place if you’re looking for a home loan. You can get started online with Rocket Mortgage if you want to get a preapproval or complete refinance approval. Alternatively, you can give one of our Home Loan Experts a call at (888) 980-6716. Hope this helps!

  2. Hi! My son is looking to buy the condo he currently renting. I (his mother) will be co-signing. What is the difference between non-occupant and occupant co-signer as far as loan details? A lender has told him conventional is the only way to go but are there any first time homebuyer programs available to him even If I own a home with my husband?

    1. Hi S:

      It could be possible that he could get an FHA loan under normal circumstances in addition to a conventional option. However, the condo would have to be approved by the FHA, so maybe that’s why it’s not a possibility. Many of the first-time home buyer special loan options and grants available through the government and other sources only require that one person on the loan be a first-time home buyer. It sounds like he’s already been talking to someone, but if he would like to go over his options, we would be happy to help him go over them online through Rocket Mortgage or any call with one of our Home Loan Experts at (888) 980-6716. Hope this has been helpful!

  3. I was almost approved for a FHA loan, but was off on my income by $400!!! I was told that I could use a cosigner, but the only person I can find to qualify with the credit is my children’s father. Is he not qualified to be able to be used as a cosigner?? I was told they had to be strictly family only! & To me, he technically is being he’s the father of my children. So can he really not be used??

    1. Hi Jennifer:

      The non-occupying cosigner technically doesn’t have to be a family member. However, if you do that, the minimum down payment on an FHA loan has to be 25%. In order to make a lower down payment as low as 3.5%, it has to be a family member. Unfortunately, being the father of your children doesn’t legally qualify him as family. I see that you are working with us, so I’m going to have someone reach out and see if we can come up with an action plan to get where you would need to be to move forward.

  4. My net to debt is not good. My sister will cosign a loan for me. We both have good credit. I would like an FHA /first time home buyer loan. IS this possible ?

    1. Hi Kim:

      It’s possible to have your sister cosign with you. However, if you’re on the loan, your credit score would still have to be at least a median of 580 FICO to get an FHA loan no matter who was on it with you. I’m going to recommend you reach out to one of our Home Loan Experts at(888) 980-6716. They’ll be able to help you go over your options and possibly help come up with a plan to get you where you need to be.

      Thanks,
      Kevin

  5. I would like to cosign for a mortgage for my granddaughter in south Carolina I live in new York state and have been told I need to own a property in south Carolina before I can cosign but I vcannot find what the time frame is -from the time I close on another property to cosign jhers… or is there a time frame like 6 months or a year as a property owner before I can sign with her?
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    1. I’m going to have you speak with one of our Home Loan Experts to go over your situation, but I can’t think of a reason you would have to be a resident of South Carolina. You can get in touch with us at (888) 980-6716.

      Thanks,
      Kevin Graham

  6. My husband and I are both Traveling Union Electricians. We work large jobs around the country making great money and take time off while collecting unemployment. We both have over 800 credit scores and a sizable savings for 20+% down. We wish to buy a home Where we will spend our vacation and unemployment time. The problem is that the unpredictable nature of the construction industry may lead to us not being employed through out the home buying process. Would a co-signer such as my Mother, who has a very steady good salary and also 800+ credit, allow us to qualify if my husband and I are not currently employed? We will have unemployment income, currently $900/ wk. We can swing a down payment of over 20% if need be.

    1. Hi Kelli:

      We can certainly help you look into your options. I’m going to suggest you speak with one of our Home Loan Experts by calling (888) 980-6716 and we can go over the particulars of your situation.

      Thanks,
      Kevin

  7. Hello,
    We (myself and my husband) are wanting to purchase a home soon. We own a rental property in another state, both work full time w2 jobs here in TX, and also each have some self-employment income that shows as very minimal after tax deductions. We have enough down for an FHA loan, but our DTI comes back high because of the self-employment income reported AND the new rules on how student loans are calculated (I am on an income based plan, and the new rules state that the lender has to count my debt at 1% of the loan, vs the actual payment which is a $400 difference). Without the student loan issue, we are at 45% dti, with it we are at about 50%. Our credit scores are both near or over 700.

    My brother in law said he would cosign if necessary. He has very little debt, doesn’t own a home, and has good credit.

    Do we just proceed with him as a cosigner? One lender stopped working with me because of our complicated self employment and another said that my student loans are the problem, but she was leary about putting single guy in his 30s as a cosigner.

    Advice?

    1. Good morning, Kellee:

      A Home Loan Expert could ultimately help you look into all of your options, but one thing I think you might want to consider is a conventional loan. There are rules in place for conventional loans that allow us to use the monthly payment you’re actually paying as opposed to 1% of the loan in most cases. Your credit scores are more than high enough to qualify, assuming your numbers are accurate. If for some reason you do end up having to proceed with a cosigner, that’s something we can go over with you. I’m going to recommend that your next step be to go ahead and get in touch with us to go over your situation. You can do so by filling out this form or calling (888) 980-6716. Hope this helps! Have a great day!

      Thanks,
      Kevin Graham

  8. Hi!
    I am a first home buyer in Florida. My income is 40K after deductions. 5 part time jobs. 3 of it more than for 2 years. My credit score is 723. Have 20K cash. Only debt is a car 380/month. Would like to buy a nice house or townhouse, but when I punch in numbers in Zillow it is saying I can buy only under 100K. My target is 160-220K range home. One of my part time job’s owner offered me to co-sign for me. I am from Europe have no idea how it goes here. Is this an option for me to buy a nicer home than I supposedly can afford but someone co-sign for me and I still own it and I pay the mortgage?

    1. Hi Kolos:

      Having a non-occupant cosigner is an option. It would add to your qualifying income and enable you to potentially buy a more expensive home if you wanted to. I’m going to recommend you talk to one of our Home Loan Experts to go over your options. You can get in touch with them by filling out this form or calling (888) 980-6716.

      Thanks,
      Kevin Graham

  9. My husband and I would like to purchase the condo we are now renting. Our credit scores are around 525. My son said he would like to co-sign for us. Would a conventional mortgage be possible as FHA is not accepted by the Homeowners Association here ? My son already had his home mortgage thru Quicken ,

    1. Hi Shelby:

      Unfortunately, lenders are required to look at the lowest credit score of all clients on the loan. The two of you would have to bring your credit score up to at least 620 before you could qualify for a conventional loan. Having your son cosigning with you would lower your debt-to-income (DTI) ratio, but you need to improve your actual credit.

      I’m going to recommend you check out our friends at QLCredit. You can pull your credit report and score for free without affecting your score. You’ll also get personalized tips on how to bring your score up to where it needs to be. You could also talk to one of our Home Loan Experts who may be able to provide additional help by digging into your situation. You can get in touch with them at (888) 980-6716. Hope this helps!

      Thanks,
      Kevin Graham

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