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Can you get a mortgage if you're already a co-signer?

Jim Quist Nov 28, 2022 6:04:00 PM
Can I get a mortgage if I’m already a co-signer?

As a co-signer on a mortgage, you've committed to another person's financial obligation to the loan.

You probably co-signed to help out a friend or family member who couldn't qualify for the loan independently. But now that you're looking for a mortgage of your own, your good deed can make it more difficult for you to become a homeowner yourself.

You can still get approved for a mortgage as a co-signer, but you may need to take extra steps to get there. Below, I break down the responsibilities you've taken as a co-signer, how it changes your mortgage application, and what you need to do to get approved.

How a mortgage co-signer can help you buy a home


What are my responsibilities as a mortgage co-signer?

When you co-sign a loan, you take on all the financial responsibilities you would for your mortgage.

With a mortgage, the term "co-signer" usually means a "non-occupant co-borrower." A "non-occupant co-borrower" is a person who is jointly applying for a mortgage but they don't plan to live in the home. Because you're both borrowers on the mortgage, you (the co-signer) and the primary borrower (the person living in the house) are partners in owning the home. As such, both of you take on the debt.

Because you're on the hook for the mortgage, you're also responsible for the monthly payments. So if the primary borrower misses payments or defaults, you're accountable for those missed payments. And when you go to apply for your mortgage, those missed payments will hurt your chances of qualifying for another loan. 

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How does co-signing a mortgage affect my credit?

Your credit score and DTI (debt-to-income ratio) are crucial factors in determining what type of mortgage you can get. The better your credit and DTI, the better loan terms you'll receive and the cheaper your monthly payments will be.

Credit: Cosigning can change your credit in several ways. Since you've taken on the same responsibilities as the primary borrower, the additional debt tied to your name could lower your credit score. In addition, if the primary borrower misses a payment, your credit score will drop. On the other hand, if the primary borrower makes all their payments on time, the positive payment history will improve your credit score.

DTI: Your DTI tells your lender how much of your income is needed to pay your current monthly debts and, in turn, how much is available for a mortgage payment. Even as a co-borrower, the mortgage payment counts toward your monthly debt, potentially skewing your DTI.

Generally, you want your DTI at or below 50% of your monthly income. As the primary borrower pays off the loan, your DTI will lower; their payments reduce your total debt over time. But if you look to buy a home soon after co-signing, your DTI could be over the ideal 50%, and you may need help to qualify for the loan you need. 


How to co-sign a mortgage and still buy my own home

It's possible to get your mortgage, even if you're already a co-signer for someone else. It may be harder to qualify, but there are three standard solutions to boost your chances of approval:


Make 12 or more payments to omit the co-signed debt.

Mortgage rules permit co-signers to omit co-signed debt after the primary borrower makes 12 or more timely payments.

First, make sure the person you co-signed makes at least 12 payments on time. Next, get verification that he made the payments to the mortgage company, like an online bank account transaction history, copies of bank statements, or canceled checks for the past 12 months. Then, send copies to NewCastle Home Loans, the lender handling your new mortgage. After that, we will omit the co-signed mortgage debt from your debt-to-income ratio.


Get removed from the mortgage.

The primary borrower, the person for whom you co-signed, can remove you from the mortgage by selling or refinancing the home. He can sell the house if he earns enough income to qualify for the loan. Or he can add a different co-signer to replace you.

Schedule some time to talk with NewCastle Home Loans about your options. At NewCastle, we believe in simplifying the mortgage process and empowering our customers with the knowledge they need to buy a home confidently. 

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Jim Quist NewCastle Home Loans
President and Founder of NewCastle Home Loans. Jim has been in the mortgage business for 20+ years.

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