A joint application loan (or joint personal loan) is similar to a traditional personal loan, but instead of only having one borrower, the loan has two. Both borrowers are equally responsible for the loan. During the application process, the lender will assess both the borrower and co-borrower's creditworthiness.
You can get a joint personal loan from some online lenders, banks or credit unions if both parties are members. Here are the steps to obtain a joint loan: Check eligibility requirements. Pay close attention to the lender's credit score and debt-to-income ratio requirements.
For example, joint personal loans are fairly common among couples when one person has lower credit or when two incomes can help the couple qualify for a larger loan amount. Applying for a joint loan with someone who has an excellent credit rating might also help you secure lower interest rates or better terms.
One of the pros of using a co-borrower on a mortgage is that you'll likely have more buying power. A co-borrower can also help you buy a home with a better interest rate if your credit score or debt-to-income ratio needs improvement.
This is called a joint mortgage. Most joint mortgages are shared between two people, but some lenders will allow up to four people to buy together. You can take out a joint mortgage whether you are all first time buyers or not.
While there's no actual legal limit as to how many people can be on a home loan, getting a bank or mortgage lender to accept a home loan with multiple borrowers might be challenging. As a rule of thumb, no more than four borrowers are typically allowed on a conventional mortgage loan.
Applying for a Mortgage Together
Now that we've got the living situation covered, let's focus on the financing of it all and how you both will apply for a mortgage together when you're not married. Most lenders will accept applications from unmarried couples but may face any challenges due to the legal framework.
And while the terms are similar, a co-borrower — or joint applicant — shares ownership of the loan and assumes responsibility for payments from the start. On the other hand, a co-signer is only liable for the loan if the primary borrower fails to make payments.
Yes, you can put your spouse on the title without putting them on the mortgage. This would mean that they share ownership of the home but aren't legally responsible for making mortgage payments.
A co-signer is someone who may add their name to your application to help you qualify for a loan, but they aren't financially obligated to pay back the loan unless you are unable to continue making payments.
You cannot simply list a spouse's income with, or instead of, your own if you apply in your name alone. However, you can list their income if your spouse agrees to become a “co-borrower” on the loan.
Co-signing and co-owning a car are two different ways to approach applying for a car loan with an additional borrower. In both cases, the secondary borrower needs to have sufficient credit and income to support the loan on their own. But each has benefits and drawbacks, depending on what both parties are looking for.
Lenders can consider the credit scores of both borrowers when co-signing an auto loan. If you have a lower credit score, having a co-signer with a higher score could work in your favor. In terms of which credit-scoring model is used for approvals, that can vary by lender.
The Bottom Line. A co-applicant can increase the loan funds you qualify for, so if you're contemplating a large purchase, it may be wise to have one. If you just need a good credit history to gain a lender's confidence, a co-signer will likely suffice.
Are all borrowers required to be on title to the property, if there are multiple borrowers on the loan transaction? When there are multiple borrowers on a transaction, only one borrower needs to occupy and take title to the property, except as otherwise required for mortgages that have guarantors or co-signers.
Qualifying For Joint Personal Loans
Most lenders require a minimum credit score of 640 – 650 for both co-borrowers. However, if one borrower has an excellent credit history, some lenders may allow one of the borrowers to have a credit score as low as 580-600.
The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).
Spouse's income: If you're married and the lender allows it, you may be able to include your spouse's income on your loan application. This may be allowed if you can use that income to help repay the loan. You may need to include your spouse as a co-applicant if you choose to include their income as a source of income.
Applying for a joint personal loan might make it easier to get your application approved, get a lower interest rate, and qualify for more money than with an individual personal loan.
With a joint loan, you are equally responsible for the loan repayments. If either you or your co-borrower falls behind on your payments, credit scores for both borrowers can take a hit. On the flip side, making on-time payments each month can boost credit scores for both account holders.
On a joint mortgage, all borrowers' credit scores matter. Lenders collect credit and financial information including credit history, current debt and income. Lenders determine what's called the "lower middle score" and usually look at each applicant's middle score.
You don't have to worry about family loans being subject to tax consequences if: You lend a child $10,000 or less, and the child does not use the money for investments, such as stocks or bonds. You lend a child $100,000 or less, and the child's net investment income is not more than $1,000 for the year.