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Is Co-Borrowing an Option For You When Buying a Home?

Wednesday, April 20, 2022   /   by Flr Team

Is Co-Borrowing an Option For You When Buying a Home?

It’s common for two people to buy a home together even if it’s not a spouse. You’ll both need to pay mortgage payments, but it’s a lot easier to afford a home when you’re splitting the cost with someone else. Plus, you’ll also share gained equity.

The most common type of co-ownership is when a married couple buys a home together. But there are other types of co-buyers that mortgage lenders will allow, for example, adult siblings looking to purchase a home that’s more fit for them to care for their elderly parent, or someone that’s been saving up for their first home, but is afraid of the responsibility of being the sole owner of the home. They could purchase it with a friend as joint owners.

So what is co-buying? It means you are the co-borrower on the mortgage loan. You’ll both apply for the loan together and both will go through the same financial checks as someone applying alone.

Each co-borrower will have the same equal amount of ownership of the property and can make any decisions relating to its use without having to consult with the other owner. Both parties are also responsible for paying their share of expenses associated with maintaining and repairing the home, as well as property taxes and homeowners insurance. 

One of the benefits of purchasing a home with another borrower is that it may lower your mortgage rate and possibly increase your home buying budget. It may also help you qualify for a loan if you’re teetering on being eligible. Your two combined incomes will determine how much you can borrow, making it more likely that you’ll be approved for a higher loan amount. Plus, it’s  more likely that you’ll be able to make a larger down payment than if you purchased on your own. And don’t forget, the cost of maintenance, repairs and home improvements can be split as well. 

Keep in mind though, that credit scores are also checked. If one borrower has a low score or large debt, it could affect your qualification resulting in a higher interest rate or maybe even being denied a loan.

Another risk of having a co-borrower is if one party can’t cover the monthly expenses, the other party will have to cover those expenses for them. Sometimes it can also be difficult to agree on certain things such as who’s responsible for maintaining the property and what to do if one owner decides they want to sell when the other one doesn’t.

So what is the difference between a co-borrower and a co-signer? A co-borrower is responsible for the same expenses as the primary borrower, whereas a co-signer agrees to be responsible for repaying the mortgage loan if the primary borrower cannot do so. The co-signer is not on the title or deed, but simply just helps the borrower receive the mortgage. An example of this is when a parent co-signs for their adult child that may not be able to qualify for the mortgage loan themselves.

Co-ownership can be a great way for people to afford more home than they would be able to if they purchased alone. Just make sure to carefully consider who you choose to co-own with you. For the best possible outcome, all parties should have good credit scores, financial stability and a good personal relationship. Check with a lender to see whether you qualify and how much you can afford together.

Not sure if co-owning is an option for you? Give our team a call to help get you started on your journey.

Florida Lifestyle Realty


Florida Lifestyle Realty LLC
Jackie Griffin
6500 N. Atlantic Ave. Suite C
Cape Canaveral, FL 32920

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