1. Home
  2. Blog
  3. Home Buying/Selling
  4. Sign Here: Applying for a Mortgage with a Non-Occupant Cosigner
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.

Related Posts

This Post Has 200 Comments

  1. My parents want to purchase a house with 50% down payment and have credit scores above 700. The problem is they have no income and plan to get jobs after they purchase the house. They are relocating from another state. Can they get a loan?

  2. Me and my bf are looking into buying a house for $65,000. My credit score is 757. My bfs credit score is 647. He has three negatives items on his credit (small balances). We are working on paying it off. I spoke to one rep that said we couldn’t be approved because we havent been at our jobs the required length of time. Together our income is about $2600 monthly. My grandmother said that she would co sign with us? How likely is it that we could get the loan?

    1. Hi Chelsea:

      It’s not really possible for me to give you this kind of advice in the comments because every situation is different, but if you talk to one of our Home Loan Experts and explain your situation, they’ll be able to give you more guidance. Please fill out this form or call 888-728-4702 and we would be happy to speak with you.

      Thanks,
      Kevin Graham

  3. If a loan is granted with a cosigner, would they be able to get off of the loan later or before the loan is paid off? Or how could they get off of the loan? Would a refinance help?

    1. Hi Kainoa:

      If you get a loan with a cosigner, you could refinance them off the loan down the line when your situation changes. I hope this helps.

      Thanks,
      Kevin Graham

  4. I am trying to get a loan for a house that my parents will be co-signing with me. I have a pretty small income (family of 4 on about $25k), but a great credit score (720+). My parents have a higher income and excellent credit as well. I can’t afford much of anything for a down payment. We already have the house (it’s owned by family), and just need to repay the purchase price of about $160k. Are there any options out there for me???

    1. Hi Katie:

      We can certainly help you take a look at your options. I’m going to recommend you talk to one of our Home Loan Experts to go over your situation in detail and see if we have anything that matches your needs. You can get in contact with them by filling out this form or calling (888) 728-4702.

      Thanks,
      Kevin Graham

  5. Will a Non-Occupant Co-Borrower obtain a better interest rate on an FHA loan?

    Example: Primary borrower has low credit score/thin credit. Would adding a co-signer with excellent credit result in a lower interest rate?

    Hypothetically, if the primary borrower with low/no credit is approved at 6%, would adding a co-signer (with excellent credit, income, and assets) play a factor in obtaining a lower rate?

    1. Hi Anna:

      So a few things here. If the borrower has no credit or a lower credit score than 580 on an FHA loan, we can’t do the loan even if they have a cosigner because we have to look at the lowest available credit score. That said, assuming they meet minimum qualifications a cosigner could help because the DTI would be lower in that instance.

      Thanks,
      Kevin Graham

  6. Hello my name is Leury.
    I am trying to purchase a condo or a small home with a loan ranging from 75-95K.
    Here is the issue I’m encountering.
    I am a non-resident alien, I am only authorized to work.
    I make 63K a year, and I’m married to a citizen.
    My score ranges from 730-740’s. My wife’s scores range from 720-730’s. My wife has no work background, she is a “stay-at-home-mom”.
    I tried getting a loan before, i was approved until they finished asking me about my legal status here in the U.S, then i was quickly dismissed/rejected.
    Can my wife get a loan with no work background or annual income?

    1. Hi Leury:

      So your wife can’t get a mortgage with no income or work history. That being said, we could certainly help you locate your options. Depending on your work authorization, it may be worth taking a second look to see if we can help. Every situation is different. I’m going to recommend you talk to one of our Home Loan Experts by filling out this form or calling (888) 728-4702.

  7. I’m going through a bankruptcy but my husband has a credit score of 630-650, he has a co signer, how much should we expect to have saved for a down payment? 20%? Or can we get away with less ??

    1. Hi Stephanie:

      You may be able to make a 5% down payment. The down payment is one of the factors that determine your rate, so higher is better if you can do it. You also have to pay for mortgage insurance with a down payment of less than 20%. That said, a higher down payment is not required for a primary property. I’m going to recommend you talk to one of our Home Loan Experts to discuss your options by filling out this form or calling 888-728-4702.

      Thanks,
      Kevin Graham

  8. Hi,

    Are 30 yr/fixed Jumbo loans with 20% down available for two borrowers where one is a non-occupant? Are there any restrictions on non-occupancy at all with Jumbo loans?

    Thanks.

    1. Hi John:

      Unfortunately, we only offer jumbo loans with a nonoccupant if it’s a VA interest rate reduction refinance loan where the co-client was already on the existing loan or title. I’m sorry, but I wish you luck.

      Thanks,
      Kevin Graham

  9. I HAVE A CREDIT SCORE OF 561,& make about 52,500 a year. Cosigner scores in the 700’s high end , makes less . how could we work this ??

    1. Hi Mike:

      When investors are working at your credit score for the purposes of mortgage qualification, they look at the lowest credit score of all borrowers on the loan. Essentially what this means is that we need to get your credit score up to 580 before we can start looking at your mortgage options. The good news is that credit can be worked on. We have a service in QLCredit where you can pull your own credit without affecting your score. When your credit is pulled, you’ll get personalized recommendations on things you can do to improve your score. This should give you some concrete next steps.

      Thanks,
      Kevin Graham

  10. I’m in a unique situation I would think and need some advise.
    My employer wants me to move closer to work.
    I am his general manager and run his company.
    My girlfriend and I are on board and have found a few houses. Around 165k we have around 15k to put down
    My income is 100k salary but due to a divorce with 2 repossessions my credit score is below 500.
    My girlfriend has a credit score for 615 but only makes 15k a year.
    My boss said he would co sign or the company would buy the house or he would buy the house and I’d pay them back but he would rather co sign.
    We have around 4 mil in a local savings bank and around 60mil in another.
    Would going through one of those banks work better, how should I approach this
    Thank you for any help in advance

    1. Hi Ross:

      Unfortunately, often times when you get a mortgage, it’s almost immediately sold to outside investors and insured by the FHA, Fannie Mae, Freddie Mac, etc. In order to insure the mortgages, these groups have strict requirements including minimum credit score and they go by the lowest score on the loan. You need to get up around 580 in order to qualify for an FHA loan. Cosigning would only help with DTI. I’m going to give you a blog post with information on how you can get your credit score up and also put you in touch with our friends at QLCredit. However, if he wants you to move in the immediate future, your best option may be to have your boss buy the house to your options could be pretty limited right at this moment.

      I hope this at least helps give you an idea where you stand.

      Thanks,
      Kevin Graham

  11. Hi,
    My fiance and I are looking into purchasing your first home both of our credit scores are around 640- 660 and they are continuing to get better the problem I have is our income we own a business we do our own paperwork and our business income fluctuates year-to-year would it be helpful for us to seek a cosigner such as my grandparents to help us qualify for a home? With our income I am sure will not qualify for the size home that we require for our family. Also a bigger problem would be that my fiance has a judgment on his credit for $7,000 is that something that will be an automatic red light for lenders? (It’s not legitimate, that’s why we have not paid it, it’s a disgruntled previous employer)
    Thank you!

    1. I would talk to someone before making any decisions, but if you think documented income will be an issue, you can certainly take a look at having your grandparents cosign. In terms of the judgment, that’s something where if it’s not really legitimate, you should probably look into challenging legally. In any case, I recommend going ahead and talking to one of our Home Loan Experts to get advice on your situation. You can reach out online by filling out this form or call (888) 728-4702.

      Thanks,
      Kevin Graham

  12. My husband and I have been approved for an Fha loan. We are currently have a contract contingent on Selling our house. Nothing is happening. We were told today we wouldn’t be able to rent our house due to new Fha rules. We have great credit score and income but have a bankruptcy that has been discharged. So we need to stay with Fha. If we got a co-signer could we then qualify to hold two mortgages and then rent out our home since the new mortgage then wouldn’t be dependent on the sale or rental income of our current home. Thanks!

    1. Hi Julie:

      I’m not familiar enough with the rules to answer that question. I see that you’ve inquired with us and I’m going to get you to someone who knows more information on FHA than I do.

      Thanks,
      Kevin Graham

      1. That’s ok. I have a mortgage person already was just looking for an answer tonight if possible. Thank you for the quick response.

  13. Hi,
    Me and my husband have excellent credit history 750+. We already own a home but we are looking to be co-borrower for my mother in-law who is moving from overseas and have not credit history. She has some retirement and rental income. Would there be any issues in this kind of situation?

    1. Hi Yusha:

      So when someone has no credit to begin with after moving from overseas, things get a little complicated. The best next step for you and your mother-in-law would be to talk to one of our Home Loan Experts. You can do that by filling out this form or calling (888) 728-4702. We can go from there with you.

      Thanks,
      Kevin Graham

  14. My husband and i are looking to buy a $165,000 house but our credit scores are both under 500. I was wondering if my grandparents could co sign to help us buy since their credit is in the 800 range. They are retired and our income is about $30,000 annually. Our DTI is less than 40% but our payment history is very shaky right now because of past unemployment. Are we just shooting for the stars on this one?

    1. Unfortunately, we are required to look at the lowest credit score of all borrowers on the loan, so you would need credit scores of at least 580 before we can help you. The good news is credit can be worked on. We have a service in QLCredit where you can get a look at your credit report and score. More importantly, you can get personalized tips for how to improve it. Hope this helps!

      Thanks,
      Kevin Graham

  15. I’m looking into buying a home here in Texas at $138,000 with a 3.5% down pymnt, however I was told by 2 different loan officers that my dti is what’s hindering me. I have an auto loan that one loan officer suggested I pay off and would increase my loan amount significantly(if I had that kind of money that would have been the option). However my dad is willing to cosign for me but his credit score is 556 and he only has 3 open accounts a $383 car loan and $660 of debt( I pulled his credit) and he has a steady VA income of 2201.00 per month. I’m afraid that with his credit score yet again I wont get approved for the FHA loan, please help?

    1. It’s really best if you speak with one of our Home Loan Experts regarding options that might be open to you. The best way to do that is to fill out this form or call (888) 728-4702. I can tell you that I don’t advise adding your dad to the loan because the minimum credit score for an FHA loan is 580 and lenders are required to look at the lowest credit score of all clients on the loan when qualifying.

  16. I am interested in buying a house using an fha loan I have a good credit score but my debt to income ratio only allows be to buy a cheap house and I was wondering if my grandma could non occupant co-sign and I use her income to get a bigger loan

    1. Hi Laura:

      It’s possible to do that with FHA, but you need a 620 credit score. At that point, it would be worth it to take a look at conventional loans because you might be able to get better terms. I’m going to suggest talking to one of our Home Loan Experts. You can get in touch by filling out this form or calling 888-728-4702.

      Thanks,
      Kevin Graham

  17. I have about $160K in federal student loan debt and about $160K in private student loan debt. My federal loans were in default but now are not. My private are in default but we are working towards a payoff plan.

    My income is $135,000 annually base, plus about another $20K or so in bonuses or other referral income for cases I referred to other attorneys (I am an attorney).

    My credit shows that I pay all other debt timely about 98% of the time.

    My tenancy is documented and can be proven as being on-time for the past 5+ years at between about $2,400/month to $2,500/month.

    My credit score is about 560.

    If I were to have a cosigner or co-borrower (parent or in-law(s)), either with perfect or near perfect credit, could I qualify for a mortgage for a home in the $375,000 range with 3.5% down? How much would I need for closing costs? How much would the typical interest rate be (assuming a cosigner/co-borrower with a credit score of 800+?

    Thank you for any input/assistance!

    1. Hi Jon:

      You have to get your credit score up just a little bit to 580. Even if you have a cosigner, all major mortgage investors including Fannie Mae, Freddie Mac and the FHA require that lenders look at the lowest median credit score of all clients on the loan. That said, it sounds like you’ve already taken steps to start trying to improve your credit. I’ll have someone reach out to see about providing advice.

  18. I am ready to buy, however my mean credit score is terrible, my Mom has since offered to cosign, as she has excellent credit. I was told buy a mortgage broker that I have zero options until my personal score is at least a 580. He stated that it doesn’t quite matter what my cosigner’s standing is, as I will not be approved initially for any loan (FHA or traditional). Any advice?

    1. Hi Kelly:

      Unfortunately, the mortgage broker is correct. When looking at qualifying your credit, lenders are required by all major investors to take a look at the lowest median score for all borrowers on the loan. The only thing having your mother cosigning would do is potentially help with the debt-to-income ratio because her income would be added.

      This article has some tips on how to rebuild your credit and you can always get in touch with one of our Home Loan Experts at 888-728-4702 to try and go over your situation and see if we can help with any personalized tips.

      Thanks,
      Kevin Graham

  19. I am currently in a land contract and the balloon payment is up. My credit is still not where it needs to be in order to quantify for a mortgage. My father in law has agreed to either co- sign for me or attempt to purchase the property himself, but he has his own mortgage and a rental property he owns. What are the odds of him being able to help us if he’s on a fixed income?

    1. Hi Richie:

      It may depend on where his debt-to-income ratio stands. I think the best thing for you to do would be to talk to one of our Home Loan Experts and go over your situation. You can do that by either filling out this form or calling (888) 728-4702. They’ll be able to look into your options more thoroughly.

      Thanks,
      Kevin Graham

  20. I’m looking to buy a home I have money to put down and have decent credit. I need a cosigner due to the fact that I get paid off of commission and been doing it only for a year.. My question is could my dad cosign for me if he just forclosed on his home?

    1. Hi Danielle:

      Unfortunately, your best option may be to find another cosigner. Since he has a foreclosure on his record, we wouldn’t be able to help you until at least a year from the foreclosure date and you wouldn’t have many options before three years. Hopefully, this at least gives you an idea of where you stand.

      Thanks,
      Kevin Graham

  21. Hello,
    I’m willing to be a co-borrow for my daughter. We both have great credit. We have already be approved for a FHA loan. I was given more paper work which included an Occupying Afidavit and Finacial Status. Signing this would say I will be occupying the home. Which I will not. The lender knows this. When I asked he said this is normal paper work. I don’t feel comfortable signing knowing I won’t be living there. Also looking through all the papers I don’t see anywhere staying I am non-occupant co borrow, just borrow. Is this the correct way it is done? Thank you

    1. Hi Kelly:

      I definitely wouldn’t sign anything you’re not comfortable with. Depending upon the way it’s written, there may be legal implications. We would be happy to provide a second opinion. I recommend you talk to one of our Home Loan Experts by filling out this form or calling (888) 728-4702.

      Thanks,
      Kevin Graham

  22. Hello, I am looking into FHA loans to buy my first home, but, I have really bad credit history. I got into some financial hardship in my early twenties and have been stuck in a rough loop since. I am almost 30 now, and still my credit stinks. I do have in laws who are willing to cosign, but I guess my question is, do you think it would be better to just let my in laws buy the house and we can set up a rental type agreement for us to pay the monthly mortgage to them and then they can pay the bank? Is there any reason that would not work? Thanks for your help.

    A

    1. Hi Allie:

      The problem you’re going to run into doing that is that your parents would be paying a higher interest rate because it would be considered an investment property if they’re not living there as the only ones on the loan. I’m going to recommend you talk to one of our Home Loan Experts to better go over all of your options. You can do that by filling out this form or calling 888-728-4702.

      Thanks,
      Kevin Graham

  23. I’m looking into buy a condo I currently live in but due to bad credit and a past bankruptcy I am not able to get a loan at this time by myself. So looking into getting a cosigner but I have no family and friends are not in that position. Is there a service I can buy to get a cosigner or company that can help me out. Please need help

    1. Hi Danielle:

      I know there are peer-to-peer lending services, but I can’t think of any that will cosign a mortgage as that’s a bit different than standard personal lending.

      Thanks,
      Kevin Graham

  24. This is my first time doing anything related to home buying. My current landlord wants to sell, we want to buy. I do not have good credit but my parents are willing to co-sign. What are the steps I need to take? I am a bit lost and don’t have a whole lot of time before they offer it to someone else. Any help and/or advice would be very much appreciated.

    1. Thanks for reaching out, Julie. A good first step is going through Rocket Mortgage. You can enter your information there and chat with a home loan expert whenever you have questions. They can help look at your credit situation and provide the best possible suggestions. Thanks and best of luck to you!

  25. I have what is marked as “poor credit”. I only have around $2000 worth of school loans left. What is good about my situation is that my fiancé and I both have FT incomes, hardly a lot of debt. I have a family member that could co-sign, and I have money to put down as a down payment, but am I being unrealistic in trying to get a mortgage? I feel like a loan specialist would look at me and laugh! Any advice helps.

    1. Hi Dana:

      I can’t comment on your chances for mortgage approval because that would be something a mortgage banker would have to take a look at and see if we have a program that makes sense for you. If you go ahead and fill out this form, we can have a licensed mortgage banker reach out to you.

      Thanks,
      Kevin Graham

1 2 3 4

Leave a Reply to Zing Admin Cancel comment reply

Your email address will not be published. Required fields are marked *