The typical mortgage has one or two borrowers on it. It’s usually a husband and wife, but any two people can be on a mortgage together if they qualify for it. Lenders look at all qualifying factors for both borrowers, such as their credit, income, and assets.
Just how many borrowers can be on a mortgage, though? Are two the maximum number a lender allows?
Adding People to a Mortgage
There’s no rule stating that two people are the maximum number allowed on a mortgage. If you have a situation where it makes sense to have more than two people on the mortgage, you can add them to it.
A few common examples of this include:
- Older parents that have adult children living with them – Older parents often want their children on the loan so that the children can take over the payments when the parents pass away. It’s easier to pass the mortgage onto the child when they are already listed on the loan, as most mortgages aren’t assumable.
- Young friends that want to buy a home together – It’s not often recommended that friends purchase a home together, but it is possible to do so. If one or two borrowers can’t qualify for the loan on their own, adding another borrower or two may help their case if it adds enough income and little debt to the equation.
Who Qualifies for the Mortgage?
With more than one person on a loan, it’s important to understand how lenders look at the application. While you might ask someone to be on your loan because they make good income and can help your case, if they have bad credit, it can hurt you.
Lenders look at the middle credit score of all borrowers. They then use the lowest of those middle credit scores to qualify you for the loan. Here’s how that could hurt you:
You have a 700 credit score but low income. Your debt ratio is too high to take on a loan yourself, even though your credit score is good. You ask John, your friend living in the home with you to go on the loan too. John makes great money, so you assume he will help your case. The problem is that John has a 600 credit score. The lender will use this 600 credit score to qualify you for the loan, which typically means you won’t have any loan options at your disposal.
Before you ask anyone to join forces with you to get a loan, make sure you know what their credit looks like. Is it above a 680 credit score? If not, you may want to think twice about asking him/her to come onboard.
Taking Someone Off of the Loan
Another careful consideration to make when deciding who to put on your mortgage loan is how long you will want that person on the loan. In the case of friends buying a home together, what happens when one or more of the friends goes off and gets married? That person will probably want to buy a house with their spouse, which means he’ll likely want off the mortgage on your home.
Unfortunately, you can’t just eliminate someone from a mortgage. You have to refinance the loan because the lender needs to make sure you still qualify for the loan without that borrower. If you don’t qualify, you’ll be forced to either keep your friend on the loan or sell the home. It could lead to legal battles or strained relationships, which is why careful consideration should be taken before entering into a mortgage with more than your spouse.
Technically, you can have as many people as you want on a mortgage, as long as they qualify. Is it in your best interest to do so, though? It really depends on the situation, but in most cases, two is good and three or more tends to be a crowd.