A co-signer can help a borrower qualify for a mortgage, but it comes with serious financial obligations for the co-signer—and that won’t include any ownership rights on the house.

For would-be homebuyers with poor credit, or a lack of an established credit history, a co-signer can make or break their ability to buy a home. But agreeing to become a co-signer comes with significant financial responsibility, since you would be on the hook for any missed payments—so it’s not a decision to be made lightly.

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shopping, here’s what to know about becoming a co-signer—and what rights, risks, and responsibilities can come with it.

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What rights does a co-signer have on a house?

When a prospective borrower has poor payment history, or just a lack thereof, mortgage lenders can be hesitant to approve them if they’re not confident they’d be able to make on-time payments toward the loan.

However, adding a co-signer with a strong credit score and payment history to the mortgage could give lenders enough confidence to grant the loan. As another added plus for the borrower, a co-signer in good financial standing could help them qualify for better loan terms, like a lower interest rate.

But to understand what rights a co-signer would have on a house, it helps to understand what exactly a co-signer is—and how their position differs from the borrower’s.

What is a co-signer?

A co-signer for a mortgage won’t have title or ownership of a house, but they will be considered financially responsible for the loan if the primary borrower doesn’t make a payment. Just like the borrower, their financial situation and credit score will be examined before a mortgage is approved.

It’s also important to understand that a co-borrower is different from a co-signer. A co-borrower would be considered an additional borrower alongside the other borrower(s) and would share ownership of the property.

So, in summary, does a co-signer have rights to a house? Unfortunately, no—being a co-signer won’t give you rights to a house—but it does make you financially responsible for payments if the primary borrower doesn’t make them.

Depending on the terms of your mortgage, a co-signer can often fall off the mortgage after you’ve made a certain number of payments. Sometimes, the borrower might need to request a co-signer release form from your lender to make this happen, and they may need to meet certain credit score or other financial requirements on their own before the co-signer can be removed.

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Why is a mortgage loan denied in underwriting?

What responsibilities does a co-signer have—and what are the risks?

Simply put, a co-signer of a mortgage’s sole responsibility is for making payments on a mortgage if they aren’t made by the borrower. That comes with a number of potential risks that you’ll want to consider carefully before signing any mortgage paperwork.

The financial commitment will be long-term

Co-signing on any type of loan is a big financial responsibility, but considering conventional mortgage term lengths are most commonly for 15 years or 30 years, you need to be comfortable with making this kind of commitment over the long term.

Your own borrowing ability could be affected

If you plan to make purchases of your own in the future that will require a loan, being a co-signer on a mortgage will affect your debt-to-income (DTI) ratio. If your DTI ratio becomes too high, you might end up not being able to buy a new vehicle when your current one needs replacing, or you may have to wait on purchasing a new home of your own.

Your credit score could be impacted

When mortgage payments are missed, this won’t only affect the borrower’s credit score—it will also negatively impact the co-signer’s. And since missed mortgage payments tend to result in a steeper drop for higher credit scores, it’s possible the co-signer’s credit could end up taking the harder hit.

That effect becomes most damaging if the house ends up facing foreclosure, because this will be recorded on the co-signer’s credit report, too.

You might have to deal with collections—or lawsuits

As the co-signer, it’s also possible that collections could reach out to you ahead of the primary borrower when they seek out late payments.

If mortgage payments go unpaid long enough, you also face the risk of being sued by the mortgage lender. Or, you might have to file a lawsuit against the borrower yourself in certain circumstances.

If you do agree to end up being a co-signer for someone, you’ll definitely want to make sure you’re both clear on your expectations for each other. You may also want to set up an agreement with the borrower for them to let you know they can’t make a payment before it’s due so you have the time you need to respond and protect your own financial interests.

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Questions to ask yourself before becoming a co-signer on a mortgage

When a borrower fails to make payments on their own mortgage, there can be serious financial ramifications for the co-signer. That’s why it’s important to consider carefully whether becoming a co-signer is the right decision for you and the borrower.

If you’re deciding whether to become a co-signer for a mortgage, here are some important questions to ask yourself:

What type of loan am I co-signing for, and what are its terms and conditions?

Could I make a monthly mortgage payment on this house if necessary—in addition to my own housing costs? Am I willing to do that?

How will this mortgage affect my own debt-to-income ratio?

What is my relationship with the borrower? How might this agreement affect that relationship?

Has this friend/family member demonstrated to me they’re financially responsible? Have they had reliable income for a reasonable amount of time?

Has this friend/family member demonstrated they’ll be able to make the monthly mortgage payments?

Will the borrower be able to afford their housing costs if property taxes, insurance, or other costs were to increase?

MORE: How to remove PMI from your mortgage

Alternatives to co-signing on a mortgage

If you’ve been asked to co-sign on a mortgage, it’s also important to remember there are alternative options out there. Here are just a few examples of other choices you could consider if co-signing doesn’t seem appealing to you.

Buy a home yourself, then rent it to your friend/family member: If you can handle the extra monthly payment but would rather have ownership rights on the house in question, it might be worth opting to rent to the family member or friend instead.

Become a co-borrower instead: Unlike a co-signer, a co-borrower will share ownership rights on a house (and the additional responsibilities that come with them). Depending on the circumstances, it could leave you with more options than co-signing. Just keep in mind this can come with risks and challenges of its own, too, and it will also depend on the borrower’s level of comfort with co-owning the home with you.

Let the borrower wait or explore other lending options: Just because one lender requires a co-signer for a borrower doesn’t mean another will. However, if a borrower just isn’t financially ready for a mortgage, it may be better to encourage them to wait or let them explore other lending options on their own.

Helping someone purchase a home can be a great feeling, but it isn’t a decision to be made lightly. Make sure you’re comfortable with the choice and can handle the financial responsibility before agreeing to become a co-signer on someone else’s mortgage.

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Finding affordable home insurance

Whatever decision you make regarding becoming a co-signer, you’ll want to make sure your own home is protected by the right

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FAQs

Should I co-sign on a mortgage?

Co-signing on a mortgage comes with great financial responsibility and significant risks, which is why financial experts often don’t recommend doing so. If you do decide to co-sign on a mortgage, it’s important to make sure you’re comfortable with all aspects of the decision, and to make sure you have the financial resources to do so.

Can a cosigner take a house?

Unlike a co-borrower, a co-signer won’t have a claim to a property, so they can’t take a house from the borrower if they stop making payments, but they’ll be considered financially responsible for payments if that happens.

Does a co-signer have rights to property?

While a co-borrower on a mortgage would share homeownership rights, a co-signer would not. They would, however, be responsible for any mortgage payments missed by the primary borrower.

Can I be removed as a co-signer on a mortgage?

Depending on the terms of your mortgage, a co-signer might be released from the loan after a certain amount of time if on-time payments are made, or if the borrower eventually meets necessary requirements on their own. The borrower may need to request a co-signer release form to remove a co-signer from their mortgage.

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