Joint mortgage loans: everything you need to know

A joint mortgage allows you to share the responsibilities of a loan with two or more borrowers, whereas a standard mortgage loan is typically tied to one borrower.

• Joint mortgages are most often used by married couples, but they can also be used among non-married borrowers.
• You may be able to enter a joint mortgage with family members, friends, or a partner.

If you take a mortgage out as an individual borrower, you are solely responsible for your loan. Joint mortgages extend that responsibility to multiple borrowers on the same loan. All borrowers must submit a mortgage application, and then they are equally responsible for making repayments.

There’s no universal limit to how many people can be on a mortgage, but lenders will have their own requirements or restrictions. Wells Fargo allows up to four borrowers on a joint mortgage.

All borrowers must qualify for a joint mortgage. They must also meet the same underwriting conditions they would be asked about as individual borrowers. Lenders will commonly require documentation that includes:

• Credit scores – In a joint mortgage application, credit score requirements vary by lender. If there is a large difference in credit scores, the lowest credit score is often used, but some lenders may use different criteria.
• Debt-to-income ratio (DTI) – This figure shows how much monthly debt each borrower has compared to their total monthly take-home pay. This is typically combined for all borrowers.
• Proof of income – Every borrower’s income is considered to determine how borrowers can handle payments.

A joint mortgage specifically ties the responsibility of a home loan payment to two or more borrowers. It’s not the same as joint ownership, which relates to whose name(s) are on the legal deed of a home.

It may be possible to have a joint mortgage with someone, but not share joint ownership of the property. Before pursuing a joint mortgage or joint ownership, you’ll want to talk candidly with the other interested borrower(s) and discuss what options make the most sense for each of you.

Depending on the lender and loan program, a joint mortgage may make a home purchase more affordable for multiple borrowers. That’s because lenders consider all borrowers’ financial histories when approving a joint mortgage.

Some of the ways a home purchase can potentially be more affordable include:

• Qualification amount – With two borrowers’ information being considered, the dollar amount of your mortgage loan may be higher and help you qualify for more home options.
• Mortgage approval – Your odds of being approved for your home mortgage may be higher, especially if other borrowers are in relatively good financial standing.
• Higher down payment – Pooling resources from multiple borrowers means you may be able to put more money down at closing. If your down payment is 20% of the home’s value or higher, you will likely waive the need for private mortgage insurance (PMI).

The key concern with a joint mortgage is that all borrowers are held equally responsible for mortgage payments. That means all borrowers can be impacted in a variety of ways:

• Missed payments – All borrowers will be affected by late or missed payments, even if only one borrower is responsible.
• Credit scores and DTI – Similarly, all borrowers’ credit scores and DTI ratios may be affected by missed or outstanding loan payments.
• Transfer of burden – In the unfortunate event that one of the borrowers passes away, the financial responsibility of the mortgage now falls back on the remaining borrower(s). Borrowers who wish to pursue a joint mortgage should be prepared for emergencies and may have to take over the responsibilities of other borrowers if anything should happen.
• Changing a joint mortgage – If a borrower changes their mind and wants to end their joint mortgage, the process to make the change can be difficult. Make sure all parties are committed to a joint mortgage before you proceed. One of the most common paths to change a joint mortgage is to refinance the loan, but this will require one borrower to take full ownership of the loan. 

The joint mortgage application process is like the standard mortgage application – you'll just be going through it with one or more additional borrowers. The typical process looks something like this:

• Research your options – Compare lenders for mortgage options that meet all borrowers’ qualifications.
• Choose a lender and submit the application – After selecting the right lender, start the application process. Be prepared for lenders to review your credit scores, debt, financial savings, and income.
• Coordinate with your loan underwriter – If an underwriter requests additional documentation, be ready to supply proof of income or bank statements.
• Sign the closing paperwork – Once your lender sends the final paperwork, carefully review and sign to accept your joint mortgage loan.

It’s a good idea to have open conversations with the other borrower(s) with whom you want to get a joint mortgage. You’ll need to share your financial situation and find a home that meets every borrower’s needs and qualifications.

If you’re interested in a joint mortgage, talk to a home mortgage consultant today for more information. You can also brush up on what credit requirements are considered during the loan approval process.