Home buyers often ask our specialists, “How many people can be on a mortgage?” Whether you are considering buying a property with a spouse, family members, or friends as co-owners or co-signers, it is essential to understand the best strategy to secure a great rate and loan approval amount.
The short answer is that there is no strict legal limit on the number of people who can apply for a mortgage together.
However, most lenders have loan applicant restrictions that cap the number of multiple mortgage applicants they will consider at four or five. This is primarily due to the limitations of software programs almost all mortgage companies use to process applications.
Read on for some details on this subject from Champions Mortgage, the leading mortgage broker in Houston, TX.
Why Opt for Multiple Borrowers?
Choosing to apply for a mortgage with multiple borrowers offers several advantages:
Increased borrowing power. Combining multiple incomes and credit histories can often qualify a borrowing group for a larger loan or better interest rate.
Shared financial responsibility. Multiple borrowers can divide the cost of mortgage payments and other household expenses when sharing occupancy.
Co-ownership opportunities. With mortgage co-ownership, all co-borrowers own the property on the deed, ensuring equal ownership.
When considering how many people can be on a mortgage, it’s critical to remember that every mortgage borrower is equally liable to the lender for payments. If one party fails to make an agreed-upon payment, the lender can and will seek the total amount due from the other borrowers.
If one borrower defaults, every co-borrower’s credit score could suffer.
How To Apply for a Mortgage with Multiple Borrowers
Applying for a loan with multiple mortgage applicants is similar to applying individually, but each person on the loan must meet the lender’s specific requirements. This usually includes for every borrower:
Credit checks. All borrowers undergo a credit check. Any lower credit score in the group could affect approval.
Income verification. Each borrower should expect to produce proof of income, such as pay stubs or tax returns.
Debt-to-income ratio (DTI). The lender’s underwriters evaluate a borrowing group’s DTI, which usually needs to fall in a range between 43% and 50%.
Understanding Some Co-Signer Mortgage Rules
When considering how many people can be on a mortgage, understand that a co-signer differs from a co-borrower in that they do not share ownership of the property. While responsible for payments, a co-signer’s name doesn’t appear on the deed.
A co-signer must undergo the application process for underwriting evaluation. Although they do not have an ownership stake in the property or legal authority to control its use or sale, they are equally responsible for the loan with the borrower.
A co-borrower typically is also named as an owner on the deed and has legal standing to control the use and sale of the property jointly.
Before entering into a joint mortgage, reaching some preliminary agreements is often a good idea. Consult with a real estate attorney about drafting a co-ownership agreement that outlines each party’s responsibilities and lays out an exit strategy for selling or refinancing.
Champions Mortgage: Making Homeownership Easier for Everyone
Now that you’ve read our discussion of how many people can be on a mortgage, talk with the professionals at Champions Mortgage about your plans for making a home purchase.
Whether you’re navigating joint mortgage applications, figuring out co-borrower limits, or determining the right mortgage loan duration for your needs, our team of experts is here to help you with every step of the process.
Call us today at (281) 727-2500 to find out how we can help you secure the best mortgage rates for your unique situation, or visit us online to get started. Trust us to help.
