Additional applicants can add strength to a mortgage loan application. This is especially true if you do not have enough income or hold too much debt to support the payments. To add someone as an applicant, however, they have to have an interest in the property as a co-borrower. If not, the best they can be is a co-signer.
There's not a legal limit to the number of names on a mortgage as long as each borrower qualifies, but not all lenders will underwrite a multiple-applicant mortgage.
Joint Intent Document
Per Regulation B of the Equal Credit Opportunity Act (ECOA), all co-borrowers must sign a document indicating their intent to apply for joint credit. It doesn’t matter if there are two co-borrowers or 10; every one of them must acknowledge that they know and understand that they are applying jointly. The signatures of the co-borrowers on the application are enough to confirm joint intent. However, the lender may utilize a second form if it doesn’t use an application or if there are not enough lines on the application for everyone to sign.
All Co-Borrowers are Owners
Not only can every individual whose name appears on the deed to the property sign for a mortgage, they are all required to sign for or, at the very least, consent to the loan. When a lender gets ready to close on a mortgage loan, it searches the title to the property.
If the title shows that there are more owners on the property than there are applicants on the loan, it requires those applicants to consent. Consent is given when the co-owners sign the mortgage. The mortgage includes a clause known as a hypothecation, in which the co-owners agree that the property is being mortgaged to secure the obligations of the borrower.
Spouse as Co-Borrower
In most cases, a married couple applies for a mortgage loan together. However, if one spouse’s credit or debt will hurt the chances of approval, the other spouse can apply alone. However, the spouse who doesn’t apply must still consent to the loan if the mortgage is going to be on the couple’s marital residence, which is known as spousal consent. Your spouse can choose to be on the application if he or she wants, but you won’t be able to move forward without them.
Lender Limitations for Multiple Applicants
Although there's not a legal constraint against having multiple mortgage applicants, a lender typically has to underwrite the loan manually if there are more than four borrowers. Most big lenders use an automated underwriting process using, for example, Fannie Mae's Desktop Underwriter program. This software supports four co-applicants on a mortgage. If there are more than four co-applicants, the lender must initiate a manual underwriting process.
But since most big lenders don't do manual underwriting, the borrowers must find a lender willing to underwrite the multi-applicant mortgage. Lender options include community banks, credit unions and mortgage companies.
Mortgage Co-Signer Option
While all co-owners of the property are required to apply for or consent to the loan, you can add non-owners to the application as well. A co-signer on the mortgage isn’t directly liable for the loan. Rather, he is a backup in case you fail to meet your obligation to repay.
To apply as a co-signer for mortgage requirements, the person or persons who have no ownership in the property must fill out the application with you and provide proof of income and authorization to run their credit. There usually isn’t a limit on the number of co-signers you can have, provided the co-signer is willing to be on the hook for the loan.