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Mortgages
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SHOULD YOU ADD A CO-BORROWER TO YOUR MORTGAGE?

MoMo Productions/Getty Images


ADVERTISER DISCLOSURE

We are an independent, advertising-supported comparison service. Our goal is to
help you make smarter financial decisions by providing you with interactive
tools and financial calculators, publishing original and objective content, by
enabling you to conduct research and compare information for free - so that you
can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American
Express, Bank of America, Capital One, Chase, Citi and Discover.


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The offers that appear on this site are from companies that compensate us. This
compensation may impact how and where products appear on this site, including,
for example, the order in which they may appear within the listing categories.
But this compensation does not influence the information we publish, or the
reviews that you see on this site. We do not include the universe of companies
or financial offers that may be available to you.

MoMo Productions/Getty Images

Written by
Sarah Li Cain
Written by
Sarah Li Cain
Insurance Contributor

Sarah Li Cain is an experienced content marketing writer specializing in
FinTech, credit, loans, personal finance and banking. Her work has appeared in
Fortune 500 companies,…

Sarah Li Cain
 * Aug. 10, 2022 /
 * 4 min read

Edited by
Bill McGuire
Edited by
Bill McGuire


Bankrate senior editor for mortgages Bill McGuire has been writing and editing
for more than four decades at major newspapers, magazines and websites.

Bill McGuire
 * Aug. 10, 2022 /
 * 4 min read

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ON THIS PAGE Jump to Open page navigation


ON THIS PAGE

Close page navigation
 * What is a co-borrower on a mortgage?
 * Who can co-borrow a mortgage?
 * Does it matter who’s the borrower and who’s the co-borrower?
 * When is a co-borrower a good idea?
 * Can a co-borrower come off a mortgage?
 * Alternatives to a co-borrower

PREV NEXT

Having a co-borrower on your mortgage can make sense if it helps increase your
chances of getting approved for a loan. If you’re considering adding a
co-borrower to your application, here’s everything you should know.



WHAT IS A CO-BORROWER ON A MORTGAGE?

A co-borrower, also referred to as a co-applicant, is an additional borrower on
a mortgage. In a co-borrowing situation, both borrowers complete an application,
and the mortgage lender considers both your qualifications and those of the
co-borrower, including assets, credit history and income. Typically, the
borrower with the better credit profile determines the terms of the loan.

Importantly, both you and the co-borrower can have ownership of the property —
in other words, both your names are on the title — and are responsible for
repaying the mortgage.



A co-borrower isn’t the same as a co-signer. A co-signer doesn’t have their name
on the property title, but is responsible for repaying the loan. Generally, a
co-signer can be beneficial if a borrower needs help from someone with good
credit to get approved for a mortgage. If the borrower fails to pay, the lender
has the right to pursue payment from the co-signer.

A borrower might ask his parent to be a co-signer on a mortgage, for example,
since the parent’s credit history and added income and assets can increase their
chances of securing a competitive mortgage rate.



WHO CAN CO-BORROW A MORTGAGE?

The following types of people can be co-borrowers or co-applicants on a
mortgage:

 * Spouses
 * Domestic partners
 * Friends
 * Relatives

In general, any adult that’s willing to assume legal responsibility for repaying
a mortgage and wants ownership in the property can be a co-borrower.

Each potential co-borrower presents different requirements and liabilities,
depending on the type of co-borrower arrangement you choose. For example, a
co-borrower (or co-applicant, if you are not married to the other borrower),
will both be listed on the title of the home and responsible for paying the
mortgage. However, guarantors only have to pay the mortgage if the primary
borrower fails to pay.

The types of co-borrower relationships are:

Type of co-borrower Relationship Financial disclosures? Listed on title?
Responsible for paying the mortgage? Co-borrower Spouse/partner Yes Yes Yes
Co-applicant Friend/relative Yes Yes Yes Co-signer Friend/relative Yes No Yes
Guarantor Friend/relative Yes No Only if primary borrower can’t pay Title holder
Spouse/partner, friend/relative Yes Yes No






DOES IT MATTER WHO’S THE BORROWER AND WHO’S THE CO-BORROWER?

Since the borrower and co-borrower are equally responsible for the mortgage
payments and both may have claim to the property, the simple answer is that it
likely doesn’t matter. In most cases, a co-borrower is simply someone who
appears on the loan documents in addition to the borrower.

Some lenders, however, may indicate a “primary borrower.” The criteria for
determining who this person is differs between lenders. Some may define the
primary borrower as the person with the higher income, for instance, or as the
person who appears first on the application.



WHEN IS A CO-BORROWER A GOOD IDEA?

Co-borrowing a mortgage is best when both parties want their name on the
property and agree to share the responsibility of paying back the loan. It’s
typical for partners or spouses who reside in the same property to be
co-borrowers.

Having a co-borrower with good credit can also be a good idea if it boosts your
chances of being approved for a mortgage (and at the best possible rate),
especially if your credit score is on the fairer side.

It’s also a good idea if the co-borrower’s financial situation means that you
can add additional assets and income to your application. A higher income could
mean qualifying for a larger mortgage since it indicates to lenders you can make
a higher monthly payment.

Make sure you consider the unique financial situation of you and your
co-borrower when making this decision.

Times when it makes sense to add a co-borrower:

 * When you and the co-borrower have an equal partnership in the property and
   both benefit from the loan
 * When your co-borrower has strong finances and credit score
 * When a co-borrower has a lower debt-to-income ratio than you




CAN A CO-BORROWER COME OFF A MORTGAGE?

The short answer is yes.

However, while it’s possible to remove a co-borrower from your mortgage — such
as if that person is deceased or the loan is completely paid off — the process
can be somewhat challenging. That’s because lenders are reluctant to remove
borrowers since doing so can increase their risk, and cuts into their ability to
collect payments from both parties.

Still, you can remove a co-borrower from a mortgage. It may require paying fees
(some quite significant) and take some time, but here are a few methods:

 * Speak to your lender. The first logical step is to see what your lender can
   do. Lenders that are willing to remove co-borrowers may require the remaining
   borrower to re-qualify for the loan by themselves. That means you’ll need to
   have enough income to make the monthly payments and a good credit profile.
   The co-borrower may also be required to sign a document, such as a release of
   liability.
 * Refinance your mortgage. Refinancing your existing mortgage might be a
   possible solution if your current lender won’t release your co-borrower.
   Again, you’ll need to have good credit and sufficient income and equity to
   qualify.
 * Transfer your mortgage. If your mortgage is an assumable loan, you should be
   able to release a co-borrower and transfer your mortgage to someone else
   (ideally, you). Your lender will need to review your credit, and there may be
   fees to pay.
 * Sell your home. If you’re not attached to the property (say you inherited
   it), selling it and using the proceeds to pay off the mortgage might be an
   option to release all borrowers from the debt.




ALTERNATIVES TO A MORTGAGE CO-BORROWER

Borrowers who have poorer credit but don’t want to add a co-borrower to their
mortgage could consider the following:

 * Establish or reestablish credit. Working on improving your credit can up your
   chances of getting approved for a loan, or getting approved for a loan with a
   more favorable interest rate. Building credit takes time, so be patient. One
   of the easiest strategies to improve your standing is to make on-time
   payments on any existing balances, or to open a secured credit card and do
   the same.
 * Pay down debt. Paying down your debt decreases your debt-to-income (DTI)
   ratio, showing lenders that you have the means to take on a mortgage by
   yourself without stretching your finances too thin.
 * Consider an FHA loan or VA loan. Both the FHA and VA loan programs have less
   strict credit and down payment requirements, which can help you qualify for a
   loan independently.




ON THIS PAGE

 * What is a co-borrower on a mortgage?
 * Who can co-borrow a mortgage?
 * Does it matter who’s the borrower and who’s the co-borrower?
 * When is a co-borrower a good idea?
 * Can a co-borrower come off a mortgage?
 * Alternatives to a co-borrower

Written by
Sarah Li Cain
Insurance Contributor
Read more From Sarah
Sarah Li Cain is an experienced content marketing writer specializing in
FinTech, credit, loans, personal finance and banking. Her work has appeared in
Fortune 500 companies, publications and startups such as Transferwise, Discover,
Bankrate, Quicken Loans and KeyBank.
Edited by
Bill McGuire






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