How to Finance a Home With a Co-Signer

A co-signer can sometimes get you a larger loan.

A co-signer can sometimes get you a larger loan.

Financing a home is a large investment, especially if you are a first-time buyer. In this case, asking a co-signer for help can be beneficial. However, if you are unfamiliar with this process, it is not only important to know how it is done, but also the implications for you and the other person.


Before opting for a co-signer, it is important to understand what it means. A co-signer is an individual who can help you get a loan if your credit is bad or nonexistent. In turn, this person acts as a guarantee to the lender by paying the debt if you fall behind.

Choose a Co-Signer

Choosing a co-signer is a major decision. The agreement is based on trust -- trust that you can pay the debt yourself and trust that the co-signer is personally and financially reliable. Simply having a close relationship, such as a friend or loved one, does not mean they are a good candidate. The co-signer needs to have good credit in order to qualify. The better your co-signer's credit, the more likely you are to get a loan. Do not take this agreement lightly. You need to be financially responsible and capable of handling the debt yourself. If you have poor money-management skills or a tight income, you may fall short on your payments. This not only harms your co-signer's credit, but it also puts an extra financial burden on him.


Once you choose your co-signer, contact your lending company to fill out the paperwork. You and your co-signer will be asked to provide specific information. These can include previous addresses, social security number, past and present employers, monthly gross income, bank accounts, tax records, and any current or past debts. Both you and your co-signer should keep copies of the forms for future reference.

Safety Measures

As an act of consideration, inform your co-signer about safeguards. Co-signers can ask lenders for written agreements stating that the lender will contact the co-signer if you fall behind on payments. Lenders may also allow a co-signer to have limited responsibility. This means that, although they will have to make monthly payments, they will not be responsible for late fees or other charges.


About the Author

Alex Saez is a writer who draws much of his information from his professional and academic experience. Saez holds a Bachelor of Arts in English literature from Queen's University and an advanced diploma in business administration, with a focus on human resources, from St. Lawrence College in Kingston, Ontario.

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