Can adding a co-borrower help you qualify for a loan?

The Mortgage Minute is weekly informational series presented by Laura Borja, Your San Diego Home Loan Expert.

Could adding a co-borrower to your transaction be the key you qualify for a loan? Maybe!

Adding a co-borrower to your transaction could be a way to help you qualify but it all depends on the situation.

Does the loan program allow co-borrowers?

If that co-borrower is not going to be living in the property with you then they are considered a non-occupant co-borrower. Some programs, like down payment assistance programs, do not allow non-occupant co-borrowers.

On VA loans, non-occupant co-borrower are also not allowed. And if you decide that you want to purchase a property together with someone who is going to be living in the property and that person is not your spouse or another VA eligible person, then you are going to have to come up with a down payment.

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Let’s say that the program that you are applying for allows for a co-borrower. So how does it work?

Their income and your income have to be sufficient to cover all of your debts, the new mortgage payment, all of their debts, plus of their housing expense if they will not be living in the new property.
For non occupant co-borrowers, their full housing expense has to be considered.  That includes, property taxes, insurance, HOA and mortgage insurance.  If they are renting and there is no mortgage listed on the credit report, we will verify whatever their rental payment is and add it Into the debt totals to calculate the proper debt to income ratio.

The verdict:

So yes, you could qualify by adding a co-borrower to your application but it really all depends on the program and the situation. You can have a co-borrower that makes tons of money but the amount of debt that they carry or their housing payment or the combination of both could kind of wipe out any benefit and then they are of no help to you at all.

I hope that answers your questions as to whether or not adding a co-borrower could help you qualify for a loan.
If you have any questions on this topic or any other mortgage-related topic, by all means reach out to me.
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