Look, I talk to borrowers every single day who think they can't buy a home because their credit score is sitting at 615. Or their income alone won't stretch far enough to qualify for the mortgage they need. And a few years ago, I would've had to deliver some disappointing news. But the landscape shifted dramatically in November 2025, and co-borrowing just became one of the most powerful tools in your home buying arsenal.
Let me paint you a picture. Just last week, I was working with a couple where one partner had a 720 credit score with solid income, while the other was rebuilding after some medical debt knocked their score down to 595. Under the old rules, they would've been stuck. Today? They're getting keys to their first home next month.
So I was talking to a borrower yesterday who asked me what exactly is a co-borrower, and how is this different from having someone co-sign. This is the part nobody talks about enough, so let's get into the details properly.
A co-borrower is someone who applies for a mortgage loan with you and shares equal legal responsibility for repaying that debt. Both names go on the loan application, both incomes get counted, and both people are on the hook if payments get missed.
Here's where it gets interesting. According to LendingTree's analysis of Federal Reserve data, mortgage originations in the first half of 2025 totaled $884 billion, with 79.6% issued to super-prime borrowers with credit scores of at least 720. That's a tight market. But co-borrowing helps more people break into that market by combining financial strengths.
Generally, co-borrowers share the title to the home, meaning both people have ownership rights. But the loan and the title are legally separate documents. You can absolutely be a co-borrower on a mortgage without your name appearing on the property title. Let me be real with you: this is a terrible situation to be in. You'd be legally required to pay the mortgage every month but wouldn't have any right to live in the house or make decisions about selling it. Not gonna lie, I've seen this destroy relationships and finances.
Between you and me, the biggest mortgage news in 2025 happened on November 15. Fannie Mae eliminated its minimum 620 credit score requirement for purchase and refinance loans processed through Desktop Underwriter. This follows Freddie Mac's lead from several years ago.
What does this mean for co-borrowers? Before November 15, if you wanted a conventional loan and one co-borrower had a 619 credit score, you were automatically disqualified. Didn't matter if the other borrower had an 800 score and enough income to buy the house twice over. Now, Fannie Mae's automated system evaluates credit risk holistically rather than using a hard cutoff.
The Orange County Register reported that this change particularly helps borrowers on the credit bubble with low FICO scores but strong income and cash reserves. And here's my challenge to you: if you've been told no in the past because of credit scores, it's time to reapply and see what's possible now.
When you have a co-borrower, you're essentially combining forces with someone to strengthen your chances of qualifying for a mortgage. At AmeriSave, we see this strategy work particularly well for couples buying their first home together, family members pooling resources for investment properties, or partners who want to share equal ownership and responsibility.
Most lenders get excited about co-borrowers because of the debt-to-income ratio, or DTI for short. According to Bankrate, most lenders prefer DTI ratios of 36% or below, though many conventional loans now accept up to 50% with strong compensating factors.
Your DTI compares your gross monthly income to your monthly debt payments. Everything counts: minimum credit card payments, auto loans, personal loans, student loans, and your future mortgage payment. For lenders, this number is THE key metric of how much home you can actually afford.
Here's a real-world example. You make $60,000 annually, which breaks down to $5,000 monthly gross income. You've got a $400 car payment, $300 in student loans, and $200 in credit card minimums. You're looking at a $1,200 mortgage payment.
Quick math: divide $2,100 in total monthly debts by $5,000 income equals 42% DTI.
That's workable, but tight. Now add a co-borrower making $48,000 annually, or $4,000 monthly. Suddenly your combined income is $9,000 monthly, and the same debts give you a 23% DTI. That's the kind of ratio that gets you approved for better interest rates and more favorable terms.
The way lenders treat your credit scores when you have a co-borrower depends entirely on which loan program you're using.
For most conventional loans, VA loans, FHA loans, and USDA loans, lenders historically used a straightforward rule: they'd take each borrower's median credit score from the three major bureaus, then use the LOWEST median score among all co-borrowers for underwriting.
So if you had median scores of 680 and your co-borrower had 640, the lender would qualify you at 640. This protected lenders from risk but often penalized couples where one person had solid credit and the other was rebuilding.
But wait, there's more. For private mortgage insurance on loans with less than 20% down, the rules shifted in late 2025. The Orange County Register reported that MGIC, a major PMI provider, began accepting blended credit scores as low as 600.
Here's how that works: If one co-borrower has a median FICO of 620 and the other has 580, you can average those scores to get 600. If Desktop Underwriter gives you an approve eligible recommendation, MGIC will now accept that for PMI approval. This wasn't possible six months ago.
Okay, real talk for a second. When you apply for a mortgage with a co-borrower, the process looks almost identical to applying solo except now there are two people jumping through all the hoops together.
Lenders will evaluate both borrowers' income from all sources, credit scores and complete credit history, assets available for down payment and cash reserves, employment stability and income documentation, plus existing debt obligations.
According to Fannie Mae's B3-6-02 guidance, for loans underwritten through Desktop Underwriter, the maximum allowable DTI ratio is 50%. For manually underwritten loans, Fannie Mae's maximum total DTI ratio is 36% of stable monthly income, though this can be exceeded up to 45% if borrowers meet specific credit score and reserve requirements.
Both borrowers need to provide last two years of tax returns if self-employed, recent pay stubs covering 30 days, last two months of bank statements, W-2s from the past two years, letters of explanation for any credit issues, and documentation of any additional income sources.
The Consumer Financial Protection Bureau requires lenders to verify ability to repay, so nobody's cutting corners on documentation standards regardless of which lender you choose.
This is the part nobody talks about until problems arise, so let me be very clear about the distinction between co-borrowers and co-signers.
Co-Borrowers apply for the loan jointly with you, share equal responsibility for repayment, typically have ownership interest in the property, usually live in or use the home, have both incomes count toward qualifying, and both credit profiles get evaluated.
Co-Signers have zero ownership of the property, remain fully liable for the debt if the primary borrower defaults, don't live in or use the home, provide income that helps with qualification but don't benefit from the property, and take on risk without reward.
I've seen situations where parents co-sign for adult children, thinking they're just helping out, then get stuck with a $2,000 monthly payment when their kid loses a job. The parent's credit gets destroyed, they can't qualify for their own mortgage because of the debt load, and they have no legal claim to the property. Bottom line? Co-signing is almost always a bad deal for the co-signer.
Let me paint you a picture of why co-borrowing can be a game-changer, especially in 2026's housing market.
Remember that credit score averaging I mentioned? It's a real advantage. When two co-borrowers have credit scores of 720 and 610, the averaged score of 665 can put you above the threshold for many conventional loan programs with favorable terms.
This matters because interest rates get priced in tiers. The difference between a 3.5% rate and a 4.0% rate on a $350,000 30-year mortgage? That's $109 per month, or $39,240 over the life of the loan. Better qualification equals better rate equals serious long-term savings.
According to the Federal Reserve Bank of New York via Bankrate, the average purchase price for a home in the U.S. was $512,800 in Q2 2025. That's a lot of house, and a lot of mortgage.
Adding a co-borrower's income often lowers your DTI dramatically. If you're sitting at 45% DTI solo and struggling to qualify for enough mortgage to buy in your target area, bringing in a co-borrower who drops you to 35% DTI could increase your buying power by $100,000 or more. We've helped co-borrowers at AmeriSave qualify for homes they absolutely couldn't have afforded individually.
Let's be practical. In markets where median home prices have climbed steadily, sharing a $2,400 mortgage payment, property taxes, insurance, and maintenance costs with someone makes homeownership far more manageable than trying to carry everything solo.
This especially helps first-time buyers who are trying to get into homeownership while dealing with student loans, car payments, and the general cost of being alive in 2026.
Not gonna lie, co-borrowing comes with some serious downsides that too many people overlook until it's too late.
If you or your co-borrower misses a payment, just ONE, it reports to credit bureaus for both of you. According to the Federal Reserve Bank of New York's Q1 2025 data via Bankrate, serious mortgage delinquencies stood at 0.82% in Q2 2025. That sounds low, but when you're part of that statistic, it doesn't matter what the percentage is.
A single 30-day late payment can drop your credit score by 60-110 points depending on your starting score. A 90-day late? You're looking at 150+ point drops. And both borrowers wear that scarlet letter for seven years.
You should feel absolutely confident that both you and your co-borrower can afford your respective shares of the monthly mortgage. If either person experiences income loss, the other becomes responsible for covering the ENTIRE payment, not just half. I've watched this scenario play out more times than I care to count.
Since you and your co-borrower typically own the title to the home together and share responsibility for mortgage repayment, any kind of split creates massive legal complications.
Say you co-buy with a romantic partner, then break up two years later. What happens?
Option one involves one person refinancing in their name alone, which requires qualifying for the full mortgage solo. Current rates might be higher than your original rate. You also need buy-out funds to pay the departing co-owner their equity share.
Option two means selling the property. You must wait for favorable market conditions, pay 5-6% in REALTOR® commissions, split proceeds after paying off mortgage, and both remain on mortgage until closing.
Option three involves continuing to co-own and co-pay, which requires maintaining the relationship in some form. One person typically lives there while the other doesn't. This creates complications when either wants to buy a new home.
At the end of the day, ugh I hate that phrase but it's true, removing a co-borrower from a mortgage is almost as complex as getting divorced. Actually, scratch that. It often IS part of getting divorced.
Here's something that surprises people: both co-borrowers remain 100% liable for the full debt, not just their share. If your co-borrower stops paying their half, the lender comes after you for the full amount. There's no but I paid my half defense.
According to the Mortgage Bankers Association via ConsumerAffairs, about 1 in 5 home buyers financed between 80% and 89% of their home purchase in recent years. With high loan-to-value ratios like that, there's minimal equity cushion if you need to sell quickly in a split scenario.
Look, the mortgage landscape changed dramatically in the past year, and you need to understand what's current.
As of November 15, 2025, Fannie Mae's Desktop Underwriter no longer uses minimum credit scores to determine loan eligibility. Instead, DU performs comprehensive credit risk assessment using alternative data and holistic financial profiles.
What does this mean practically? If you have strong income, solid cash reserves, and low debt even with a 600 credit score, you might get approved for a conventional loan where you would've been automatically rejected six months ago. The system is finally evaluating you as a complete financial picture rather than just a three-digit number.
Private mortgage insurers have followed suit. MGIC announced via the Orange County Register they would accept middle FICO scores as low as 600 and allow score averaging for co-borrowers. Other PMI companies are expected to adopt similar policies.
According to the Mortgage Bankers Association via LendingTree, mortgage applications decreased 1.9% in early November 2025 compared to the previous week. The 30-year fixed rate averaged 6.22% as of November 2025, while 15-year fixed rates averaged 5.5%.
For context, LendingTree analysis of Federal Reserve data shows the average interest rate for a 30-year, fixed-rate mortgage in 2024 was 6.72%, ranging from a low of 6.08% to a high of 7.22%. We're currently near the lower end of that range, which creates opportunities for co-borrowers to lock in relatively favorable rates.
The Homebuyer.com analysis of HMDA data reveals that in 2024, non-White home buyers comprised 34.15% of the mortgage market, up from 26.11% in 2018. Access to credit is expanding, and co-borrowing strategies are part of that expansion.
According to ConsumerAffairs, about 62% of home buyers use conventional loans, while approximately 29% use FHA or VA loans. Each loan type treats co-borrower credit scores differently, so understanding which program works best for your situation is crucial.
You and I should talk about money, long-term plans, and worst-case scenarios before deciding to co-borrow with someone. This isn't just filling out some forms. It's a legal agreement to work together on money for a number of years.
Before you commit, run the numbers together and calculate what happens if one person loses income. Look at both of your credit reports so you won't be surprised after you apply. Talk about what to do if someone wants to leave and make plans for how to handle it. Look over the legal protections and think about co-ownership agreements that a lawyer has made. Look at other options to see if one person could qualify for a different loan product on their own.
Every day at AmeriSave, we help co-borrowers make these choices. We can run a number of scenarios to show you exactly how your situation changes when you add a co-borrower versus applying alone, as well as which loan programs are best for you.
What is the bottom line? In 2026, co-borrowing will be more flexible than it has been in a long time because Fannie Mae has gotten rid of hard credit score minimums and PMI standards are changing. If you've been turned down for a loan before or are trying to get more house than you can afford on your own, co-borrowing might be the way to go.
But think about this choice carefully. The benefits are real: lower rates, bigger loans, and less stress on your finances. The risks are just as real: shared responsibility, effects on credit, and problems in relationships. Don't rush. Ask questions. Before you agree to anything, make sure you know what you're getting into.
When you're ready to look into your options, AmeriSave has special programs for co-borrowers, such as conventional loans, FHA loans, and VA loans. We can help you figure out how the new rules for 2025 affect your situation and help you find the loan program that works best for you.
You can't take a co-borrower off of an existing mortgage unless you either refinance the loan in one person's name only or sell the property. The original mortgage contract makes both borrowers responsible for the full term. The person who is still borrowing must qualify for the full loan amount on their own, which means they must meet income, credit, and debt-to-income requirements on their own. You would also need money to buy out the departing co-borrower's share of the equity. Some people think they can just fill out paperwork to get rid of someone, but lenders won't let a borrower off the hook without a new loan or full repayment. This is why you need to think carefully about your long-term plans and how stable your relationship is before choosing a co-borrower.
If you co-borrow on a mortgage, that debt shows up on your credit report and counts against your debt-to-income ratio for any future loan applications, even if your co-borrower pays it off. Lenders look at how well you can handle all of the debts you are legally responsible for, no matter who writes the checks each month. If you want to buy another home, an investment property, or even refinance something else, this can have a big effect on how much you can qualify for. In some cases, you may need to show 12 months' worth of canceled checks to prove that your co-borrower is making the payments without your help. Even then, a lot of lenders still include the debt in your DTI. The mortgage also affects how much debt you can have in total, since most loan programs have a limit on how much debt you can have across all of your obligations.
If your co-borrower dies, you are the only one who has to pay the whole mortgage. Under federal law, the lender can't call the loan due or make you refinance. But who owns the deceased co-borrower's share of the property depends on how the title was held and whether they had a will or estate plan. If you were a joint tenant with right of survivorship, the property automatically becomes yours. If you owned it as tenants in common, their share would go to their heirs instead of you. The mortgage debt itself stays the same and must be paid no matter who owns the property. You should tell the lender about the death and maybe talk to an estate lawyer to find out what happens to the property. It is highly recommended that both co-borrowers have life insurance to cover their mortgage payments in case one of them dies.
Yes, two people can be co-borrowers on a mortgage, no matter what their relationship is like. You don't have to be in a relationship, engaged, or married at all. Parents and adult children buying a home together, siblings pooling money to buy investment properties, business partners buying together, or unmarried couples buying before they get married are all common co-borrowing relationships. Lenders look at the application the same way no matter what the relationship is. However, co-borrowers who are not married have to think about more legal and financial issues. You should really think about writing a co-ownership agreement with a lawyer that says what happens if one person wants to sell their share, how costs are shared, who can live in the property, and what happens if one person stops paying. Unmarried co-borrowers need extra paperwork to protect their interests because marriage doesn't give them any legal protections.
Yes, the credit history of your co-borrower affects the interest rate and terms of the loan you get because lenders charge more for loans that are more risky. When figuring out your qualifying credit score for rate pricing on most conventional, FHA, VA, and USDA loans, lenders look at the lowest median credit score of all co-borrowers. If you have a 760 score and your co-borrower has a 620 score, the lender usually sets the interest rate and fees for your loan at the 620 level, which means they are higher. The changes Fannie Mae made in November 2025, on the other hand, have made things more flexible. Even though credit scores still affect prices through loan-level price adjustments, the hard 620 floor is gone, and Desktop Underwriter now looks at overall risk in a more complete way. Some PMI companies now also use average scores to decide who qualifies. Your actual rate depends on a number of things, such as your credit score, the amount of your down payment, the type of loan, the type of property, whether you live there, and the overall risk profile of the loan.
Yes, you can be a co-borrower on a mortgage for a property you don't live in, but this will change the options and requirements for your loan in a big way. At least one borrower must live in the property for a primary residence loan, but the co-borrower can live somewhere else. For second homes or investment properties, neither borrower has to live there. However, co-borrowers who don't live in the home have to meet stricter requirements. Fannie Mae says that when one borrower lives in the property and the other doesn't, the borrower who lives there must sometimes meet certain minimum qualification standards on their own. The income of the co-borrower who is not living there still counts toward qualification, but lenders look at the situation more closely. The interest rates on properties that are not owned by the owner are usually 0.5 to 0.75 percentage points higher than those on properties that are owned by the owner. You should also know that being a co-borrower on a home you don't live in means you have to make payments on a home you can't use, which is a unique financial risk.
When you co-borrow with self-employed income, it's a lot like having a regular job, but you have to provide a lot more paperwork. Self-employed co-borrowers must give two years' worth of full personal and business tax returns, including all schedules, profit and loss statements, and sometimes balance sheets. Lenders figure out qualifying income by averaging the net income from the last two years after business expenses. This often means that self-employed borrowers have less qualifying income than what they actually take home. If one co-borrower is self-employed and has a complicated income and the other has a simple W-2 income, the W-2 income adds stability that helps lower the risk of the application. But if the self-employed borrower shows a drop in income from one year to the next, this is a red flag no matter what the other co-borrower's income is. If you've been self-employed in the same field for less than two years, your income might not count at all. If you work with a loan officer who knows what they're doing, they can help you figure out what paperwork you need and how lenders will figure out your qualifying income based on your business structure and tax situation.
If you want an FHA loan in 2026, you can get one with a credit score of 500 or higher. However, the amount of money you need to put down will depend on your score. If your credit score is 580 or higher, you can get the FHA's lowest down payment option of 3.5%. If your score is between 500 and 579, you need to put down at least 10%. FHA lenders use the lowest median credit score among all borrowers to determine if you qualify when you have a co-borrower. The FHA Handbook says that the maximum debt-to-income ratio is usually 31% for housing costs and 43% for total debt. However, this can be higher if you have high credit scores, large reserves, or large down payments. The changes made by Fannie Mae in November 2025 don't directly affect FHA loans because FHA is a separate government program. However, the general trend in the industry toward holistic underwriting has also affected FHA lender policies. If you're thinking about getting an FHA loan with a co-borrower, both of your credit profiles are important. But FHA loans are more flexible than regular loans for people with lower scores or past credit problems.
Yes, adding a co-borrower could help you avoid private mortgage insurance by raising your down payment or combined income to meet the 20% down payment requirement. Most conventional loans require PMI if you put down less than 20%. You don't have to pay PMI if your co-borrower brings extra money to closing that makes your combined down payment 20% or more. On the other hand, the extra money from a co-borrower might help you get into a whole new loan program. If at least one borrower is a qualified veteran, VA loans never require mortgage insurance, no matter how much money they put down. Adding a co-borrower to an FHA loan doesn't get rid of MIP, even if the down payment is small. FHA loans always need mortgage insurance. You can't avoid the upfront guarantee fee and annual fee that USDA loans charge, which are like mortgage insurance. The easiest way to avoid PMI by co-borrowing is for the other person to bring cash that raises your down payment above 20%.
The process of applying for a mortgage with a co-borrower usually takes 30 to 45 days from application to closing, just like applying alone. However, it may take a few extra days to get documents from both people. The timeline starts with submitting the initial application and documents, which usually takes one week if both borrowers are well-organized. Then comes processing and underwriting, which takes two to three weeks while the lender checks both borrowers' income, employment, assets, and credit. It takes an extra week or two for the property appraisal. Finally, you set a date for closing once you've met all the requirements and gotten the green light. Having a co-borrower doesn't change the timeline in a big way, but it does double the amount of paperwork, income checks, and possible problems. Expect the longer end of that timeline if one of the borrowers is self-employed, works on commission, or has a complicated income. Many lenders now use technology to make it easier to collect and verify documents. This can speed up the process, but the basic underwriting and appraisal process still follows industry-standard timelines.
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