Having a cosigner on a loan is a type of mortgage insurance. If you don't pay back the loan, the lender knows it can collect from your cosigner. That gives the lender confidence to approve the loan, even if you have so-so credit. Your spouse or partner can cosign a mortgage with you, but a third party who won't be living with you can do it, too.
Good credit is the fundamental requirement for a cosigner. The reason for finding a cosigner is that your credit doesn't meet the bank standards, so you need someone with a better score to sign as well. The bank doesn't get to dictate who you choose. It can't, for example, insist that your spouse be your cosigner rather than your father or sister, or even someone you're not related to. Setting the credit requirements for the cosigner is all the say the bank has.
If your spouse has substantially better credit than you do, he's an obvious choice for a cosigner. For many first-time home buyers, asking parents to cosign makes good sense, too. A lot of parents have established good credit histories, and they're happy to help an adult child get started as a homeowner. Other relatives you're close to are also possibilities. However, relatives you never see or talk to may not be thrilled if you suddenly make contact just to ask for a big favor.
Whoever you ask, she may be reluctant to be a third party on the loan. If you default on the mortgage, she has to pay the balance or see her credit score take a massive drop. The loan is listed on her credit history, so if she applies for a loan of her own, the fact she's already obligated for your mortgage may make it tougher to qualify. If she decides it's too big a challenge, don't take it personally.
Things to Consider
Having a cosigner makes it easier to land the loan, but it doesn't help you pay the mortgage each month. If the bank doesn't think you're a safe borrower, consider whether the loan might be more than you can handle. Taking on too much debt won't work out well with or without a cosigner. If you default and your cosigner does have to pay the mortgage, that's not going to do your relationship with him any good.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.