Can You Have a Cosigner on an FHA Loan?

Written by Steven PorrelloSeptember 14th, 20225 minute read

Who can cosign on an FHA loan? | Reasons to get a cosigner | Coborrower vs. cosigner | Pros & cons | Summary | FAQs

You can have a cosigner on your FHA loan. Cosigners don’t pay for the monthly mortgage, but they can use their income level to help you qualify for an FHA loan.

Basically, FHA lenders will combine the income, assets, and debts of all borrowers and cosigners, which could help the entire party meet basic requirements (e.g., a max DTI of 43%). A cosigner’s good credit, long employment history, and higher income can help your FHA application get approved.

If you can confidently afford your monthly mortgage payments, the cosigner is simply the last push into homeownership — but it’s not always the best choice. Instead of recruiting a cosigner to your mortgage application, it might be smarter to pay down debt, find ways to boost your income, or sign with a coborrower.

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Who can be a cosigner on an FHA loan?

A cosigner can be anyone who's had a personal relationship with you BEFORE the loan transaction.

Cosigners can be friends, family, or spouses. If the cosigner isn't a direct family member, the FHA will ask for proof that you’ve had a long relationship with them that doesn’t depend on the loan.

A cosigner can’t be someone who has a financial interest in the property — such as a real estate agent, an investor, or the sellers.

Your cosigner should also meet basic FHA requirements:

  • Credit score of 580 or higher
  • Debt-to-income ratio of 43% or lower
  • Two years of continuous employment
  • Be a U.S. citizen with a Social Security number

Finally, a cosigner should be prepared to help the borrower for the long run. Although their name isn’t on the title, they are liable to pay the mortgage if the borrower misses a payment.

Cosigners typically can’t remove their name from the loan (unless the borrower refinances into another mortgage, such as an FHA streamline refinance).

Reasons why you might need a cosigner on an FHA loan

If you have high debt or a spotty employment history, then adding a cosigner could help you qualify for an FHA loan. With a cosigner, the FHA will look at the entire financial picture of all borrowers and cosigners — "averaging" out the figures to determine eligibility.

⛔️ A co-signer cannot boost a poor credit score

If you don’t qualify for an FHA loan because your credit score is lower than 580 (or 500 with a 10% down payment), you may be out of luck. Even with a cosigner, the FHA will use the lowest score as the qualifying number.

Your debt-to-income ratio is too high

A high debt-to-income ratio (DTI) is perhaps the primary reason borrowers add cosigners. The FHA doesn’t want your monthly debt payments (credit cards, car loans, mortgage payments) to exceed 43% of your monthly pretax income.

For example, if you earn $5,000 per month, but you pay $2,500 in monthly debt, your DTI would be 50%. But let’s say your cosigner earns $6,000 per month and pays $1,500 in debt.

Together, your total income is now $11,000 and your total debts are $4,000. Your combined DTI would be 36.36%, putting you firmly below the FHA requirement of 43%.


Borrower
Cosigner
Combined
Gross monthly income
$5,000
$6,000
$11,000
Monthly debt
$2,500
$1,500
$4,000
DTI
50%
25%
36.36%
FHA eligible?



You don’t have the minimum two years of continuous employment

Any gaps or periods of unemployment could disqualify you from an FHA loan — unless, for example, your employment was impacted by the COVID-19 pandemic.

Keep in mind you don’t need to stay in the same job or the same field for two years. You just need to show the FHA that you’ve been steadily earning income for that time.

Coborrower vs. cosigner on FHA loan: What’s the difference?

Coborrowers have more ownership over a property than cosigners — such as spouses. They’re actually borrowing the money, too, not just signing the papers. Because they agree to share the loan, they’ll contribute to the monthly mortgage payment, and their name will be on the title of the house.

Cosigners don’t have ownership over the property, they won’t contribute to the monthly mortgage, and their name isn’t always on the title. They’re there simply to help a borrower qualify for a loan, not pay it.


Borrowing money?
Making payments?
Named on title?
On the hook for default payments?
Coborrower




Cosigner




Cosigner for FHA loan: Pros and cons

✅ Pros: Having a cosigner…

Helps you qualify for an FHA loan. A cosigner’s financial profile can lower your DTI to meet the FHA requirement of 43%.

Prevents you from defaulting. If you miss a mortgage payment, your cosigner is legally obligated to make the payment for you.

Might help the cosigner build credit. The FHA loan will show up on your cosigner’s credit report. As long as you make payments in full and on-time, this could help both of you improve your credit.

❌ Cons: Having a cosigner…

Puts the cosigner at financial risk. When the cosigner agrees to sign the mortgage with you, they also agree to take on mortgage payments if you default. That could seriously impair their finances and prevent them from achieving their own financial goals (like saving for retirement).

Could hurt the cosigner's credit score. If you miss a payment, your late payment will show up on your credit report — and theirs. That will hurt both of your credit scores.

Could strain your relationship. Cosigners sign the mortgage with you to help you qualify. If you miss payments or default, they might take it personally.

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Summary: Is a cosigner on an FHA loan a smart move?

  • A cosigner is a smart move when you have a strong credit report and steady income, but you need a lower DTI to qualify for an FHA loan.
  • Cosigners typically won’t make monthly mortgage payments unless YOU stop making them yourself.
  • If your DTI is too high for you to afford the monthly mortgage on your own, then you could put you and your cosigner at financial risk.

FAQs about cosigner on FHA loan

Yes. If the borrower misses a payment, the late payment will appear on the cosigner’s credit report and impact their credit score.

If the borrower defaults on the loan, the cosigner is legally obligated to take on the mortgage payments until the borrower resumes making payments themselves.

Yes. The FHA allows for non occupying coborrowers — that is, borrowers who make mortgage payments but don’t live on-site. Often this can help an occupying borrower (those who live in the house) qualify for an FHA loan, as the additional income helps them pay for the monthly mortgage.

Along with other requirements, you need a minimum credit score of 580 to qualify for an FHA loan. The FHA does allow for credit scores between 500 and 580, but only if you have a 10% down payment.

Yes, first-time home buyers can have cosigners for FHA loans. Learn why you might need a cosigner.