How many people can be on a mortgage? Tips and requirements

Having trouble qualifying for a mortgage loan by yourself? Thinking about buying a home and cohabitating with a loved one or friend? You may want to consider taking out a mortgage loan with multiple borrowers.

Having two or more names on the loan can improve your odds of getting financing approval. Plus, your pooled financial resources can make the purchase more affordable overall.

But that begs several questions: How many people can be on a mortgage total? Can three people buy a house together? What are joint mortgage loan requirements? What’s the difference between a co-borrower and a co-signer, and how many co-signers can you have on a house?

You’ve got questions, we’ve got answers. Read on for helpful information and tips.

How many names can be on a mortgage?

Thankfully, when financing a home, you don’t have to go it alone. You can get multiple borrowers to sign on the mortgage loan, although there is a limit.

Co-borrowing vs co-signing

When two or more people apply for the same mortgage jointly and then share equal ownership and responsibility, this is known as co-borrowing. The loan they take out together is called a joint mortgage. Each co-borrower has a legal responsibility to repay the joint mortgage loan, and each has ownership rights to the home, whether they live there or not.

Co-borrowing is different from co-signing. A co-signer is someone who is financially responsible for the debt if the primary borrower defaults on the loan but doesn’t have any ownership stake in the property.

Technically, there is no legal maximum number of co-borrowers allowed on most mortgage loans. But many lenders and loan programs allow a maximum of four co-borrowers. Conventional conforming loans backed by Fannie Mae are typically limited to four co-borrowers.

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Rules for different loan types

Loans backed by Freddie Mac don’t have a stated limit, but many industry professionals say these loans may allow up to five co-borrowers. For conventional loans not backed by Fannie Mae or Freddie Mac – meaning portfolio or non-qualified mortgage loans – more than four co-borrowers can be approved if the lender manually underwrites the mortgage loan.

FHA and VA home loans, meanwhile, allow up to four co-borrowers, although VA loans normally allow only the qualified primary borrower and one non-spouse co-borrower. VA loans require no down payment for veterans and active duty service members. Co-borrowers who aren't veterans may be required to make a down payment.

USDA loans technically technically do not cap the number of co-borrowers permitted, although each co-borrower must reside in the property as their primary residence.

“How many borrowers actually pass the lender’s underwriting requirements is more important than the quantity of names,” says Dennis Shirshikov, a professor of economics and finance at City University of New York/Queens College.

How do mortgages with multiple borrowers work?

Joint mortgages combine the financial resources – meaning income and assets – of all parties to meet qualification standards, potentially allowing you to borrow more. Each co-borrower’s eligibility is determined by their income, debt-to-income (DTI) ratio, and credit, among other factors.

The lender will review each co-borrower’s credit report from all three major credit bureaus – Experian, Equifax, and TransUnion – and determine each borrower’s middle credit score. The interest rate is determined by using the lowest middle score among all co-borrowers.

This strategy safeguards the lender because they regard the mortgage loan as only as strong as its riskiest participant. So even if one co-borrower has outstanding credit, the interest rate will reflect the co-borrower with the weaker credit profile, since all co-borrowers share full financial responsibility for the financing.

“Crucially, all borrowers are jointly and severally responsible for 100% of the debt. That means if one co-borrower defaults, the others must pay the full amount,” says Martin Boonzaayer, CEO of The Trusted Home Buyer.

Put another way, the lender must always be repaid.

“If one co-borrower isn’t coming through with their share of the monthly mortgage payment, the other co-borrowers must come up with the money – although they can also pursue legal action against the delinquent co-borrower,” notes Martin Orefice, CEO of Rent To Own Labs.

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Requirements to purchase a home with co-borrowers

Each co-borrower will need to meet qualification requirements for the type of loan the group is applying for. Here’s a breakdown of the minimum credit score and maximum DTI typically allowed based on loan program. Keep in mind lenders may add stricter rules:

*Some lenders will approve FHA loans with credit scores as low as 500 when borrowers can put at least 10 percent down.

“All co-borrowers on the loan are subject to the income and credit requirements set forth by Freddie Mac or Fannie Mae for conventional loans. FHA loans are more forgiving, permitting lower credit scores and greater DTI ratios,” continues Shirshikov. “When it comes to VA loans, the VA requires a down payment if there is at least one qualifying veteran or active-duty service member and one non-spouse co-borrower who is not a veteran or service member.”

For USDA loans, meanwhile, any adult who will occupy the home and appear as a borrower must live in the home as their primary residence (non-occupant co-borrowers or co-signers are not permitted), and the combined income of all adult household members is considered for meeting USDA program income limits.

Additionally, every co-borrower, regardless of loan type, will need to gather necessary documents that the lender will request for review. These include a valid photo ID and Social Security number, recent pay stubs, last two years' worth of tax returns and W-2s, recent bank statements, and proof of employment.

Pros and cons of having a mortgage with multiple borrowers

Getting extra borrowers to go in on home financing with you has its benefits and drawbacks. Let’s take a closer look at each.

Pros of having a mortgage with multiple borrowers

Among the advantages of pursuing a joint mortgage with co-borrowers are:

– The ability to qualify for a higher loan amount by combining incomes, which can help you afford a more desirable home. “Combining incomes can increase purchasing power and qualify your group for better loan terms,” says Itay Simchi, founder of Proven House Buyers. “It also makes ownership more accessible, especially for first-time buyers or families pooling resources.”

– The ability to gather a larger collective down payment, which can lower your monthly payments and save on interest.

– Shared financial responsibility. The obligation to repay the mortgage debt is shared among all co-borrowers equally, lowering your risk of default and making monthly payments more manageable.

– Potentially lower interest rates. The overall strength of two or more co-borrowers makes your group appear more creditworthy to lenders, which can result in lower financing costs.

– The chance to accumulate equity more quickly. Combining incomes and savings can lead to a bigger down payment as well as the financial flexibility to make optional accelerated mortgage payments applied toward the principal, which can decrease your loan balance faster and build equity sooner.

Cons of having a mortgage with multiple borrowers

Then again, the co-borrower route should give you pause because there are some risks and downsides, including:

– Shared financial liability. “Everyone’s credit is affected equally if one borrower stops making payments,” cautions Shirshikov. Late or missed payments or defaulting on the loan can negatively impact the credit scores and future borrowing ability of every co-borrower.

– The potential for disputes and fractured relationships. Disagreements over finances, upkeep, or the sale of the home could turn ugly, possibly leading to legal issues, lawsuits, and severed relationships.

– It’s harder to make later changes. “It can be costly and time-consuming to refinance or remove a borrower from a loan if their financial circumstances change,” adds Shirshikov.

– It can take longer to underwrite and approve the loan, and more paperwork and complexity are involved.

Tips for purchasing a home with multiple borrowers

Eager to pursue a joint mortgage with co-borrowers involved? Follow these best practice recommendations from the experts:

– Create an LLC. “Establishing a limited liability corporation is one way to safeguard your own interests and keep personal liability out of partnership deals,” suggests Shirshikov.

Consult a real estate attorney before considering this option. Most conforming and government-backed mortgages require the borrower to take title in their personal name. 

– Create a written ownership agreement that specifies who pays for what and when, who owns what percentage of the property, and what happens if one co-borrower doesn’t fulfill their responsibilities. “Always have a written legal agreement outlining payment obligations, ownership shares, and an exit strategy – such as what happens if one person wants to sell,” suggests Boonzaayer.

– Determine fair ownership structure, such as joint tenancy or tenancy in common, and be sure each party fully understands the structure as well as their individual rights.

– Devise an exit strategy that outlines what happens if one or more parties want to refinance or sell down the road.

– Collectively review your individual credit reports to identify any weak points. Work on improving lower credit scores well ahead of applying for a mortgage by paying all your bills punctually and in full, reducing debt, and not opening or closing any new or existing credit accounts.

– Speak with a mortgage professional so that each party understands what it will take to qualify for the loan.

How do you apply for a mortgage with co-borrowers?

Also, take the time to fully understand the steps involved with buying a home together.

“Getting loan preapproval is the first step in the process, during which all co-borrowers will need to provide financial statements, such as tax returns, income records, and credit reports. Remember that the lender will consider all of the applicants’ qualifications when determining loan eligibility,” says Shirshikov.

Next, tour different properties, make an offer on a home, and officially submit a mortgage application with the lender of your choice. Be sure to shop around among several different lenders before applying to find the best deal based on interest rate, terms, and other criteria.

The lender will then use the combined financial profile of all co-borrowers during underwriting to verify all earnings and assets against the debt. Be prepared to respond to any requests or questions from the lender as you await underwriting approval.

Once approved, prepare to collectively sign the loan and closing documents on the day of closing. That’s when the loan will be officially completed, and final funds will be paid.

Mortgage with multiple borrowers FAQs

With bad credit, how many cosigners can you add to improve approval odds?

The total number of co-signers you can add to a mortgage loan to enhance your approval chances will depend on the loan type and lender. One to two co-signers are typically allowed with most conventional loans. FHA loans commonly permit one co-signer. Co-signers are usually not allowed for VA loans or USDA loans. When a co-signer is permitted, each must meet credit and income requirements, so adding a co-signer could potentially improve approval odds but may complicate underwriting and shared responsibility.

How many co-borrowers can share a mortgage on a second home?

On a second home mortgage, most lenders permit up to four co-borrowers, as is true on a primary residence. However, underwriting requirements are more stringent and call for larger down payments and better credit scores. Each co-borrower must be able to prove that they can manage the second property and all of their current debts.

What if a co-borrower is not able to make a mortgage payment?

When one co-borrower’s portion of the mortgage payment cannot be made, the other co-borrowers are still liable for making the payment and repaying the total mortgage debt. Missed or late payments have an impact on credit scores and credit reports for all of the co-borrowers. Since the obligation is joint and several, if there are frequent payment defaults, the creditor can pursue any one of the co-borrowers for recovery.

Pooling resources and credentials can increase borrowing power

Getting a joint mortgage with co-borrowers involved could be a smart strategy. That’s because your chances of approval could increase, you may even be able to qualify for a larger borrowing amount at a relatively lower interest rate, and homeownership becomes more affordable because you are pooling incomes and resources.

But keep in mind that each co-borrower shares equal responsibility for repaying the debt. Shop around among different lenders and learn how many co-borrowers are allowed and how many names can be in a mortgage together.

“Reaching a co-borrower agreement requires clearly defined financial objectives and contingencies,” says Shirshikov. “Because a home is both an asset and a liability, relationships may suffer if expectations are not fulfilled. It’s best to speak with a real estate lawyer before closing to avoid future financial or legal issues.”

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