If you're thinking about applying for a home loan with someone else, you need to be familiar with joint mortgages and how they work.
A joint mortgage allows you to borrow money with another person — or a few other people — and use it to buy a house together. In many ways, a joint mortgage is like a mortgage that a borrower takes out alone. But there are some extra details to be aware of when someone else is applying for a loan alongside you.
How does a joint mortgage work?
A joint mortgage is a home loan that you take out with another person or with multiple people. You and your co-borrower, or co-borrowers, all submit applications, and if you're approved, all of your names are on the mortgage.
You can decide to split up mortgage payments so that you and your co-borrower or co-borrowers each pay a portion, but at the end of the day every co-borrower is fully responsible for the entire payment.
Sometimes people apply for a joint mortgage with a spouse, but a co-borrower could also be another family member, a friend, a business partner, or someone else. Lenders aren't allowed to hold your application to different standards based on whether you and a co-borrower are married.
Owning the home
In contrast to a co-signer, who promises to repay a loan if the primary borrower doesn't but who doesn't own the property bought with the loan, co-borrowers share ownership of the home they buy with a joint mortgage.
There are a few different ownership arrangements you can enter into with your co-borrower or co-borrowers:
- Joint tenancy: All owners share the property equally. If an owner dies, their stake in the property goes to the surviving owners. Each owner is free to sell their portion if they choose.
- Tenancy in common: Ownership of the property can be split up so that one person owns a larger share than another, although they all have the same right to live there. If an owner dies, their portion of the property goes to their heirs — not necessarily to the surviving owners. An owner who wants to sell their share has to get permission from the other owners.
- Tenancy by the entirety: Two owners share the property equally, and if one dies, the property automatically goes to the other. Neither owner can sell their portion without the other's agreement. The two owners must be a married couple.
Keep in mind that getting your name on a mortgage doesn't automatically mean your name is on the title of the property or that ownership of the home is set up in the way you prefer. Before applying for a mortgage with another person, it's important to determine whether you're going to be a co-borrower or a cosigner. You should also talk to an attorney about the options for shared ownership to make sure you're getting an arrangement that makes sense for your situation.
How do you qualify for a joint mortgage?
Applying for a joint mortgage is similar to applying for a home loan as an individual. Each applicant will need to provide their ID and Social Security number, tax returns, bank statements, and other documentation of their income and assets. (Here’s the full list of documents needed for a mortgage application.)
The mortgage lender will use measures such as the debt-to-income ratio to assess whether you all can afford the mortgage, just as they do when someone applies for a mortgage by themselves. But for a joint application, the lender will look at the total income of everybody in the group. So you might qualify for a larger mortgage when you apply jointly with one or more co-borrowers if they're bringing additional income to the table. If one co-borrower's income is low, you could still qualify if another co-borrower's income is sufficient.
When it comes to credit scores, though, one co-borrower's poor credit can derail the application for everyone. Lenders generally look at the lowest credit score out of all the co-borrowers when deciding if you qualify for a mortgage. So each co-borrower will typically need to have satisfactory credit for your joint application to be approved.
You'll also have to come up with the down payment together with your co-borrowers. It doesn't matter if one person contributes more than another as long as you can produce the total amount you need.
→ Find out how much you should save before buying a home
How many people can take out a joint mortgage?
Often, there are two co-borrowers on a joint mortgage application — like two siblings, two partners, or a married couple buying a house together. But higher numbers of applicants are possible. If you want, you can team up with a group of two, three, or even more and apply for a mortgage together.
However, it may be challenging to get approved for a mortgage with lots of co-borrowers. Desktop Underwriter, a software program for evaluating loan applications that's widely used in the mortgage industry, will work with at most four applicants. So if you want to apply in a group of five or more people, it's very likely that lenders will need to switch to manual underwriting to consider your application.
You'll need to find a lender who's okay with lending to a large group of co-borrowers, and they'll probably request an in-depth explanation of why you want so many names on your mortgage. You can expect that manual underwriting will take more time than a standard automated underwriting process, too.
→ Learn more about mortgage underwriting
Which loan types allow joint applications?
Joint applications are allowed for all the major types of mortgages. You can apply jointly for a conventional mortgage from a private lender. Joint applications are also permitted on FHA loans, USDA loans, and VA loans.
If you submit a joint application for a mortgage through one of the government programs, there are some extra restrictions you'll need to comply with.
- FHA loans have rules regarding where the co-borrowers can live. A co-borrower who isn't going to live in the home that's purchased with the mortgage must have a principal residence in the U.S., unless they qualify for an exception such as being on military assignment overseas. And if a co-borrower won't live in the home, a higher down payment of at least 25% is needed, unless that co-borrower is a family member of the other borrower or borrowers and a few other requirements are met.
- For USDA loans, the co-borrowers are required to live together in the home they're buying.
- VA loans also have occupancy requirements. Any co-borrower who's using their VA entitlement has to live in the property they're buying, but a co-borrower who isn't using VA entitlement doesn't have to occupy the property. If a veteran and their spouse are co-borrowers, lenders can approve the loan themselves, but any other joint VA loan application requires prior approval from the VA.
How do you get out of a joint mortgage?
Once you take out a joint mortgage, you're just as responsible for paying it back as your co-borrower or co-borrowers. While it's sometimes straightforward to pack up your things and leave a home you share with someone else, taking your name off a mortgage isn't so simple.
Ask the lender
One option is to ask your lender to modify your loan and remove you as a co-borrower. The remaining co-borrower or co-borrowers would need to prove to the lender that they have enough income to afford the mortgage payments without your help. This will typically be a possibility only if you all have a great track record of paying your mortgage on time.
Refinance
Another option is to refinance the mortgage, with the remaining co-borrower or co-borrowers applying for the new loan without you. This only works if they qualify for a refinance on their own.
Sell the house
Finally, you all can sell the home and use the proceeds of the sale to pay off the mortgage. That means everyone has to move out, and if your mortgage is underwater, it might not be possible unless your lender signs off.
If you and your co-borrower were married and are now getting divorced, you might need a court's approval before you can choose any of these routes. (More on selling a house during divorce.)
Getting your name off a joint mortgage generally requires the cooperation of your co-borrower or co-borrowers and in some cases, your lender. And when you still have a mortgage in your name, it may be very difficult to qualify for a new mortgage. So it's best to think carefully before taking out a joint mortgage to make sure you want to share the home long-term.
Should I get a joint mortgage?
A joint mortgage offers potential advantages over taking out a home loan by yourself. Your application could be stronger with a co-borrower on board, and you'll have someone else to split mortgage payments with. Plus, it can be reassuring to know that another person is shouldering responsibility for a loan with you. Taking out a joint mortgage isn't a decision to make lightly, but it can be a good choice if you and your co-borrower see eye-to-eye and will work together to repay the loan.
