Mortgage  Question?
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Credit Score Lenders Use If One Borrower Has Low Score

I am considering applying for a mortgage with a co-borrower who makes more money than me and has a higher credit score than me. My credit score is relatively low so how does that work when two people apply for a mortgage as co-borrowers?

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

Two people can qualify for a mortgage as co-borrowers as long as both applicants qualify for the loan based on their individual borrower qualification profile including their debt-to-income ratio, credit score and employment history. If you and your co-borrower apply for the loan together then the lender includes your co-borrower's monthly income, debt and credit score to determine if you qualify for the mortgage and what size loan the two of you can afford on a combined basis. Based on the information you provided about your co-borrower's relatively high monthly income, as long as his monthly debt payments are not excessive and his credit score is high, then you should be able to qualify for a significantly larger mortgage amount as co-borrowers than you could on your own as a sole borrower. Please note that if your co-borrower currently has a mortgage on another property, then that monthly mortgage payment, as well as property taxes and homeowners insurance, are included in his monthly debt figure when the lender calculates your combined debt-to-income ratio. You can use our Two Person Mortgage Qualification Calculator to determine what size loan you can afford based on your and your co-borrower's monthly gross income and debt payments.

Depending on what your credit score is, the main issue that you may run into is that lenders typically use the lower score among co-borrowers when two people apply for a mortgage together. Most conventional mortgage programs require a minimum credit score of 680, although certain low down payment programs such as the the HomeReady Program only require a credit score of 620. The FHA Mortgage Program typically requires a minimum credit score of only 580 although lower scores are permitted under certain circumstances for borrowers who otherwise have strong financial profiles. For example, making a larger down payment, having a steady job history or having strong monthly income and relatively low debt are factors that may enable borrowers to qualify for an FHA loan with a lower credit score.

You may also want to consider the NACA Mortgage Program. NACA is a not-for-profit organization that offers mortgage programs designed to make home ownership more attainable. For example, the NACA Mortgage Program uses a character-based borrower credit review process instead of using your credit score to qualify for a mortgage. The NACA Program also enables borrowers to purchase a home with no down payment and no closing costs. We provide a detailed overview of the NACA Mortgage Program on FREEandCLEAR and you can contact NACA by visiting the NACA web site.

I recommend that you contact multiple lenders and ask about both the FHA and conventional mortgage programs. You can compare FHA lenders in your area by clicking FHA MORTGAGE RATES We advise you to contact at least four lenders as qualification guidelines vary. Plus, comparing multiple lenders is the best way to save money on your mortgage.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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