What a non-occupant co-borrower is
A co-borrower signs the loan with you and shares the obligation to repay it. A non-occupant co-borrower does the same, but lives somewhere else. You stay the person who lives in the home as your primary residence.
This setup is common when a parent helps an adult child, or when a relative steps in after a change in household income.
When it can help your refinance
Lenders qualify a refinance on income, debts and credit, the same way they do a purchase. If your income alone doesn't support the new payment, a co-borrower's income may close the gap.
- You went through a divorce and now need to refinance on one income
- Your income dropped, but you want a lower rate or a different term
- You want to remove a former co-owner and need help qualifying on your own
- Your debt-to-income ratio is just above what your loan allows
What lenders review for the co-borrower
The co-borrower goes through the same review you do. Lenders look at their credit, their income and their monthly debts, including their own housing payment. Their existing obligations count against the combined debt-to-income ratio, so a co-borrower with a large mortgage of their own may add less help than you expect.
Expect them to provide pay stubs or tax returns, bank statements and permission for a credit check.
Program rules vary
Loan programs don't all treat non-occupant co-borrowers the same way. Some programs limit who can serve as one, for example to family members. Some count their income fully, and others set extra conditions. Whether the co-borrower must also be on the title can depend on the program and your state.
Your loan consultant can tell you which options allow a non-occupant co-borrower and how their income would be counted.
Talk it through first
Joining a loan is a serious commitment. If you miss payments, the co-borrower's credit is affected too, and the lender can look to them for repayment. The new loan will also appear on their credit report and can limit how much they can borrow later.
- Agree on who pays what, and what happens if your income changes
- Decide whether the co-borrower will be on the title
- Plan how and when they might come off the loan
Getting started with CapCenter
You need a credit score of at least 620 for a CapCenter loan, and that applies to the people on the application. CapCenter refinances come with ZERO Closing Costs (restrictions apply), so adding a co-borrower doesn't change the fees you would pay to refinance.
