What is a co-borrower?

Generally speaking, a co-borrower is someone who helps a primary borrower obtain a loan that he may not qualify for. A co-borrower’s credit history, monthly income, and capability to repay a loan are considered during the application process.

In real estate, especially when applying for mortgage loans, a co-borrower may either be the primary borrower’s spouse, a family member, or a friend who has an outstanding credit score.

Importance of a co-borrower when applying for mortgage loans

A co-borrower, especially one who has a high credit score, clean credit report, and who belongs to a high-income bracket, may not only help the borrower apply for a loan but can also help him or qualify for a larger loan amount with lower interest rates. It is because the lender can ensure a lower loan repayment risk if ever the primary borrower fails to pay the loan or defaults the loan.

A co-borrower’s name can be included in the title and deed of sale as he is presumed to have equal rights and ownership on the property as he is equally responsible for the repayment of the mortgage loan. This usually applies to a co-borrower spouse or someone who is related by blood.

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Difference between a co-borrower and a co-signer

When applying for mortgage loans or personal loans for the purchase of real property, there also exists a co-signer, which is different from a co-borrower. While the latter has similar responsibilities and ownership with the primary borrower, the former is only responsible for the repayment of the loan but doesn’t have any rights over the property.

A co-signer only helps the primary borrower qualify for the loan and in repaying the loan.


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