Housing Market: Can You Get a Mortgage With More Than One Co-Borrower?
Written by
Daria Uhlig
Edited by
Cynthia Measom
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A co-borrower can help you get approved for a mortgage loan you don’t qualify for on your own — or take out a bigger loan than you could get otherwise.
If one co-borrower is good, might more be better? Possibly — but don’t push it too far. Although the law doesn’t limit the number of co-borrowers you have, your lender might.
How Many Co-Borrowers Do Lenders Typically Allow?
A co-borrower is a joint applicant on the mortgage loan. They have equal responsibility for repaying the loan, which means they, like the “primary” applicant, are responsible for the total loan amount, not just a fractional portion of it.
It seems logical that more co-borrowers would be better because it reduces the risk that the borrowers will default on the loan. In practice, however, more than four co-borrowers on an application creates red tape the loan originator might not want to deal with.
Most buyers finance their home purchase using a conventional loan, which is the type of loan that meets Fannie Mae and Freddie Mac requirements. Conventional loan originators — lenders — use a program called Desktop Underwriter to submit applications for processing because it automates the approval process. If Desktop Underwriter can’t approve an application, the lender has to use a manual unwriting process to evaluate the application and see if it can be approved.
As Fannie Mae notes in its instructions for lenders, Desktop Underwriter only allows information for four co-borrowers to be entered. Lenders can underwrite a loan with more than four, but they have to do it manually, which is a slower, more involved process. For that reason, lenders typically won’t accept an application with more than four co-borrowers.
What To Do If Your Lender Won’t Move Forward
If you need more than three other individuals to apply with you, but your lender is uncooperative, you have a few options.
When loan qualifications are the issue, strengthening your eligibility is usually the best course. Work on your credit score, pay down debt, save for a larger down payment and perhaps set your sights on less-expensive homes to give yourself a better chance of being approved.
If, on the other hand, the reason you need co-borrowers is that you’re buying the home together, you always have the option of financing the home with three of the other individuals and then adding the rest to the deed later. While that won’t make them responsible for paying the loan, they will have ownership rights to the home.
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