Yes, having a cosigner in most situations does help you qualify for a mortgage as long as the cosigner has additional income used to offset the new housing payment liability. Check out our earlier post about cosigning on a mortgage.
Consumers seeking to qualify for mortgage loan financing can use the benefit of someone else’s income to help them purchase a home or refinance a mortgage. 95% of the time it’s used on purchase money financing, but definitely can be used on refinance scenarios as well.
Cosigning allows a consumer increase the amount of debt they’re looking to apply for because larger income from the cosigning party is used to help qualify the primary borrower. A lender will look at a full credit application of the primary borrower and a full credit application on the cosigner, secondary borrower.
How A Mortgage Lender Breaks Down Income & Liabilities On Co-Signor Transaction
Total current income, less minimum monthly liabilities = total new housing payment allowance.
More specifically, a lender will typically take 45% of the gross monthly income, less monthly liabilities, and the net amount of these figures will provide the total new house payment amounts. Same exact situation on a cosigning situation.
A cosigner is:
- permanently on the application with the primary borrower
- cannot get off the obligation unless the debt is paid of via a refinance, or selling of the property or assumption of the loan if the loan is assumable
- is someone on the application, not someone simply gifting money
- can tremendously increase the amount of funds sought or rather substantially increase purchasing power
If you have a difficult or complex mortgage scenario, we can help start today by getting a complementary mortgage rate quote for your home.