Want to know what circumstances will allow a co-borrower or co-signer to be added to a mortgage loan? It’s really up to the investors who are backing the loan and the rules will vary depending on what type of loan you are getting, but there are some general rules of thumb. Some of the different types of loans are VA, FHA, and Conventional and we will discuss the differences in the last paragraph.
As a general rule of thumb a co-signer can provide information on a loan to support income for the borrower, but they are not added to the title. In Texas we don’t allow co-signers on residential property purchases.
A co-borrower can provide income, credit and asset information to support a loan for the borrower. A co-borrower must appear on the title and they share the same responsibility for the loan that the borrower does. Co-borrowers are allowed in Texas. Because Texas is a community property state, the spouse must be added to the Deed of Trust when buying a primary residence or second home with a loan. They do not have to be added if it is an investment property. The non-purchasing spouse does not have to be added to the loan documents and therefore have no responsibility to pay back the loan. However, if they are not being added to the loan, then their income and credit cannot be used to help support the loan’s borrower.
Above I mentioned there are different types of loans. On a VA Loan, only the spouse of the veteran is allowed to be on the loan with the veteran. There are always special exceptions to any rules, but remember, these are general rules of thumb. When using a conventional loan, the co-borrower can only be used to support the loan if they are going t ooccupy the property with the borrower. If they will not be occupying the property with the buyer, then they are not an acceptable co-borrower. FHA Loans allow a family member or someone with a long standing relationship with the borrower to be added to the loan and their income and credit can be used to support the loan whether they intend to occupy the home or not. But, the borrower will still have to qualify based on their own credit scores but all the income can come from the co-borrower.
So depending on the circumstances with your co-borrower, it will determine what type of mortgage you are going to qualify for.