Buying a home with a co-borrower or co-signer in New Hampshire

What's the difference between a co-borrower and a co-signer?

Both sign the mortgage note and are fully responsible for the debt. The difference is ownership:

• A co-borrower usually goes on the title and owns part of the home. Their income, debts and credit are part of the application.
• A co-signer, sometimes called a guarantor, signs the note and shares responsibility for the debt but doesn't hold title to the home.

Lenders also look at whether each person will live in the home. Someone who won't is called a non-occupant borrower, and programs treat that differently.

Can a parent help if they won't live in the home?

Often, yes, but the rules depend on the loan program:

• Conventional loans generally allow a non-occupant borrower on a one-unit home you'll live in, with extra requirements on some loans, such as how much of the down payment must come from the person who will live there.
• FHA loans generally allow a non-occupying co-borrower. When that person is a family member, the loan can usually go up to FHA's standard maximum; other non-occupants face tighter limits.
• VA and USDA loans have their own, more limited rules for adding a borrower who won't live in the home.

If a parent would rather give than borrow, a gift toward the down payment may be simpler. The gift funds guide explains how gifts are documented.

How does it affect their credit and debt?

The mortgage shows up on the credit report of everyone who signs the note, and late payments affect everyone. When a co-borrower or co-signer applies for credit later, including their own mortgage, the payment usually counts in their debt-to-income ratioDebt-to-income ratio (DTI) Your monthly debt payments divided by your gross monthly income. Lenders use it to judge what you can afford. See the full glossary×. A lender may leave it out if they can document that you've made the payments yourself for a period of time, often a year.

Everyone on the loan should go in with clear expectations about who pays and what happens if plans change.

Does it change how the deed is held?

A co-borrower who goes on title becomes a legal owner. New Hampshire deeds can be held in different ways, such as joint tenancy or tenancy in common, which affect what happens to each share. Your closing attorney or title company can explain the choices; a New Hampshire real estate attorney can advise on which fits.

How do we remove a co-borrower or co-signer later?

Taking someone off a mortgage usually means refinancing into the remaining borrower's name alone, once that person qualifies on their own income and credit. Removing a name from the deed is a separate step from removing it from the loan.

Some FHA and VA loans can be assumed with a release of liability, which is another route in some cases. The assumable mortgages guide and the buyout guide cover those situations.