Buying a home
Buying a Home With Friends or Family as Co-Borrowers
Short answer
Buying together can combine eligible income and assets, but it also creates shared obligations. The lender needs to evaluate the borrowers, occupancy, credit, debts, and program rules. Separately, the buyers should agree on ownership, expenses, and a workable exit plan.
Chris Lamm, NMLS# 209221Published Last reviewed
Decide who will borrow and who will live there
A borrower who occupies the home and one who will not can be treated differently under mortgage guidelines. Explain everyone’s intended role before choosing a loan program.
Fannie Mae allows qualifying co-signers and non-occupant borrowers in eligible transactions, subject to its underwriting and loan limits. Adding a person does not guarantee a better result; their debts and credit can also affect the application.
Review the combined financial picture
Bring income, debt, asset, and housing information for the proposed borrowers. Ask the lender to compare the complete application rather than assuming incomes can simply be added together.
Discuss how down-payment funds and reserves will be documented. A person contributing money is not automatically in the same legal position as a borrower or owner.
Put the ownership and exit arrangement in writing
Have an attorney help address ownership shares, expenses, missed payments, repairs, sale decisions, and what happens if someone wants to leave. The loan documents and ownership agreement serve different purposes.
Do not assume that a future refinance will always be available to remove a borrower. An exit plan should consider what happens if the remaining owner cannot qualify at that time.
Before applying together
- Confirm occupancy and each person’s intended role.
- Agree on contributions and a realistic shared budget.
- Have the lender review all proposed borrowers.
- Get legal advice on ownership and an exit arrangement.
Sources and program details
These references support the program details discussed above. The program selected for your loan and its current requirements control your application.
Questions about this guide
Does adding a co-borrower always increase the approval amount?
No. Income, debts, credit, and program rules are evaluated together.
Can a private agreement release someone from the mortgage?
Do not assume so. A change to obligations under the loan requires the lender or servicer’s applicable process.
Written by Chris Lamm
Senior Loan Advisor and Branch Manager, MortgageOne Inc. NMLS# 209221. 25 years in mortgage lending, 6,000 families served.
Want the answer for your specific situation?
A guide covers the general case. Your file is a specific one. Bring me the details and I will give you a straight answer, including when the answer is no.
The Friday market email.
One email. What moved this week and what it means for your buyers. Written for agents.