co signer
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A co-signer is an individual who is fully responsible for debt repayment with the original borrower. These individuals could be parents, friends, or partners. But just so you understand fully what these terms mean, this article will show you who a co-signer is and what his work is when it has to do with a mortgage, lease, and personal loans. Let’s start with knowing the difference between a co-signer and a guarantor (cosigner vs guarantor).

Co-signer vs Guarantor

A co-signer and a guarantor (co-signer vs. guarantor) are not the same because they are simply other tenants. The co-signer signs the lease agreement with the renter and is allowed to reside in the unit.  A cosigner can be a relative or acquaintance who agrees to share financial responsibility for rent, fees, and any damages. This person may live in the apartment and pay their own share of the rent while simultaneously accepting responsibility for the remaining portion of the rent if the other tenant fails to pay.

The most significant distinction between a co-signer vs a guarantor is that a co-signer is instantly liable for the lease, just like the renter. A guarantor is only obligated to pay rent when the tenant fails to do so.

When Does a Landlord Need a Co signer or Guarantor?

There are a variety of reasons why and when a landlord may believe an applicant requires a co-signer or guarantor to sign the lease paperwork. Landlords often have a set of rental criteria in place to safeguard themselves and to avoid accepting candidates who may not pay rental fees or manage the property. If a renter does not meet one or more of these conditions. A cosigner may be necessary for a tenant if they:

  • Have poor or no credit?
  • Don’t meet the financial criteria (typically three times the rent)
  • Inadequate rental history
  • Lack of a consistent employment history
  • Unable to obtain landlord or employer references.

Although there are other choices, such as charging a bigger security deposit. Or ask for the first and last month’s rent in advance. However, needing a co-signer or (vs) guarantor is the most effective approach to ensure the lease is paid. If your tenant fails to pay the requisite lease or fees. Then the obligation to do so in their stead falls on the co-signer or guarantor legally. Please remember that the cost of the security deposit and move-in fees can still be contingent. According to the findings of tenant screening. 

Should Landlords Check the History of a Cosigner or Guarantor?

As a landlord, you should screen every co-signer and guarantor in the same way that you evaluate every candidate who applies to lease your home. Proof of earnings and employment (typically in the form of pay stubs or bank statements) history. And a comprehensive credit check may be required. This job has a lot of legal responsibility, so before you accept an applicant. Be certain their cosigner or guarantor is competent enough to hold this post. And besides, the goal of obtaining a cosigner or guarantor is to ensure. Firstly, you as the landlord, receive monthly payments and generate a consistent rental income from your property.

What Is the Function of a Cosigner or Guarantor?

If the renter fails to pay the rent, both the co-signer and the guarantor are equally liable. It is up to you and your local authorities to determine how long a guarantor or cosigner is required to pay late rent. If the renter fails to pay the rent promptly and you impose late payment, Then it will be added to the rent payment. If the renter continues to fail to pay the lease, the co-signer or guarantor will be obligated to do so (as well as the late fee, if applicable). Provide specifics about the cosigner’s or guarantor’s participation in the leasing agreement. Specify when they are liable to pay rent or fees, and how they will do it. Lastly, how will they be notified of any payments that are missing?

Should I Give Preference to Applicants Who Do Not Need a Cosigner or Guarantor as a Landlord?

Landlords have the authority to select the most competent candidate. You have the right to reject a potential tenant’s entry if they need a co-signer or guarantor. Especially if they are otherwise eligible. If another eligible tenant meets all of your rental standards, you have the legal right to accept their request over another, regardless of whether they were not the first in line. You have the freedom to choose the appropriate tenant for you and your residential property. As long as your decision is founded on reasonable grounds and is in accordance with fair housing legislation.

Co-Signer on Mortgage

Co-signer mortgage isn’t limited to mortgages alone. Personal loans, school loans, and auto loans may all have a co-signer.

The sort of loan you take out determines whether you can have a co-signer. Co-signers are most commonly used on two types of mortgages: conventional loans and FHA loans. Let’s look at the requirements for both sorts of loans.

Co-signer Requirements for Conventional Mortgage Loan

If you want to apply for a traditional loan with a co-signer. They must sign the loan and commit to repaying the mortgage if the main tenant fails to do so. The co-signer, however, does not have to be listed on the home’s title. To assess if you can secure a loan, the creditor examines both your credit and the credit of the co-signer.

Creditors will evaluate your and your debt-to-income co-signers (DTI) ratio while reviewing your application. When it relates to what constitutes an acceptable DTI, each lender has its own set of criteria. Knowing your own and your co-debt-to-income signer’s ratios can help you acquire a loan.

Co-signer Requirements for FHA Mortgage

FHA loans are government-backed loans. It enables you to purchase a home with as little as 3.5 percent down and a lower credit score. If you want to secure an FHA mortgage with a co-signer (you can have up to two), your co-client must meet a few basic requirements.

First and foremost, your co-signer must be a family member or close friend. Mortgage lenders regard the below relatives to be suitable for FHA loan co-signers:

  • Grandparents and parents (including step, adoptive, and foster)
  • Grown-up Kids (including step, adoptive, and foster)
  • Brothers and sisters (including step, adoptive, and foster)
  • Uncles and aunts
  • In-laws
  • Domestic partners or spouses

If the co-signer is a close friend. You must send an extra letter to your mortgage lender detailing your relationship and why your buddy wishes to assist you.

Your non-occupant co-client must also spend the majority of the year in the United States. If you get less than a 20% down payment, they must have a DTI of 70% or less. The co-signer on a Fha mortgage must be on the property of the home.

Co-Signer Personal Loans 

Whenever you want a personal loan, you need a steady source of income and a good to exceptional credit score. It may be hard to discover a creditor who will accept you if you do not have those items. If you do approve a loan, you may be saddled with a high-interest rate.

That’s when a cosigner can come in handy. A cosigner is someone who has good credit and a steady income. Typically a family member or close friend as we have said previously. The cosigner serves as a guarantor on the personal loans and is jointly liable for their repayment. If you are unable to complete your monthly dues, the cosigner will be held accountable. Since having a cosigner reduces the creditor’s risk. They are more likely to grant you a mortgage and provide you with favorable repayment plans.

Lenders That Accept  Personal Loans With a Cosigner

Although not all low-interest personal loans provider enables you to add a co-signer to your online and physical application, some do. The following are mortgage companies that accept cosigners on applications. 

#1. FreedomPlus

The lowest percentage obtainable from FreedomPlus is exclusively accessible when you add an eligible cosigner to your request for personal loans.

#2. Laurel Road

If you don’t fulfill Laurel Road’s lending standards. Attaching a cosigner to your application for personal loans can help you get in. Laurel Road performs a soft credit draw, allowing you to check your loan eligibility without affecting your credit score.

#3. LendingClub

LendingClub basically makes loans to customers with good credit scores and low debt-to-income ratios. And also a credit report that demonstrates a long credit history with a broad mix of credit lines. If you do not meet these requirements, LendingClub may authorize you to subscribe to a joint application, which increases your chances of loan approval.

#4. LightStream

LightStream is an internet borrower that provides a variety of personal loans, both safe and unsecured loans. They do accept cosigners, which may help you qualify for a personal loan without requiring security.

#5. OneMain Financial Services

OneMain Financial serves customers with bad credit. They do allow combined applications, which can help you apply for a good rate than you would otherwise.

#6. PenFed

PenFed may be a wonderful option if you need a modest personal loan. You may borrow as low as $600 up to $50,000 for a variety of financial purposes. You can also enroll with a co-signer, which may qualify you to get personal loans for reduced interest rates.

Keep in mind that you do not need to be a PenFed member to apply. You will need to participate in the credit union if you are successful and wish to take the loan.

#7.  SoFi

SoFi usually provides personal loans to those with strong to excellent credit. This could be a suitable option if you want to consolidate debt (such as credit card debt). Or borrow for home renovation projects. Their personal loans are unsafe, which means you don’t have to provide collateral, they also accept a co-signer. Which may increase your chances of qualifying.

#8. Smaller banks and credit unions 

While most large banks no longer provide personal loans, smaller banks and credit unions do. A whole lot of them also enable you to add a cosigner to your request. Which might help you eligible for a cheaper interest rate. It’s a good idea to check with your local bank or credit union to see what rates they have available. You might be able to receive a higher rate if you previously own a bank account with them. 

What to Consider Before Bringing a Cosigner for Personal Loans

If you have bad or average credit, requesting personal loans with a cosigner can improve your chances of acceptance. A cosigner may also get you a lower interest rate than you would get on your own. But, there are a few things you should know before asking someone to cosign a loan:

1. If you crash down on your monthly bills, your cosigner will be in a terrible situation. They’ll have to repay the loan payments, particularly if they can’t really afford to. Or risk having their credit wrecked and trust me, nobody wants terrible credit. If this occurs, you can be certain that your personal connection with that person will suffer as a result.

2. Your co-signer is always liable for the loan. It is hard to extract a cosigner from personal loans after the loan has been issued. This implies your cosigner may be held liable for the loan for years until it is paid off. This is the reason when applying for a loan. It is critical that both you and your prospective cosigner fully grasp the dangers and advantages of consigning.

Can I Be Removed as a Cosigner?

It’s possible to remove a co-signer from a car loan. If you had a co-signer on the original loan but no longer require or desire that relationship, you can get the co-signer removed. You have the option of requesting a co-signer release, refinancing the loan, or selling the vehicle and paying off the original loan.

Why Is It Risky to Be a Co-signer?

The major disadvantage of cosigning a loan for someone else is that you commit to paying the mortgage if the primary borrower defaults. Guaranteeing a loan is risky for both your credit and your connection with the borrower.

What Credit Score Does a Co-signer Need?

More than 700.
A decent credit score and a solid credit history are prerequisites for asking a friend or family member to co-sign a loan or credit card application. Many financial institutions and credit card companies will not accept a cosigner unless they have a credit score of 700 or higher.

Can I Cosign if I Have a Lot of Debt?

Your chances of getting a mortgage loan approved won’t improve if your co-signer has a lot of debt relative to their income. Even if a mortgage lender takes a cosigner’s good credit into account, astronomical debt loads will still prevent them from getting a loan.

Does Cosigning Hurt Your Credit?

Cosigning does not hurt your credit. However, if the person you’re consigning to fails to pay, then it may affect you negatively.

What Happens if You Are a Co-signer?

That means you have the obligation to repay the loan in full if the borrower fails to do so.

What Are the Rules for a Cosigner?

The cosigner will be the one to pay for the rent if the tenant fails to do so.

Secondly, the cosigner’s income, assets, credit score, and debt-to-income ratio must all be examined in the loan application.


A co-signer is an individual who is fully responsible for debt repayment, with the original borrower. That individual can be a parent, friend, or partner.

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