How Much Can a Loan Cosigner Really Help Get You Approved?

Question

I'm looking at purchasing an owner-occ  SFR for myself for first time in decades and am no longer a W-2. Multi-family DSCR's were much easier to obtain, I'm recognizing.

I'm off from meeting the DTI ratio by a ways, although I've rented this same house for years and the debt service won't be too much over the rents. and I get a haircut on the rental property income, etc. I also can have early Soc Sec starting in a few months and receive a small pension. My 1120S  income varies. I presume I would have to go FHA as they are supposed to be more lenient.

To use a related cosigner, do you "at least have to be close" or something along that thought-processs by the lender?  I would presume nobody would want one to be reliant on the co-signor. I've also read that the borrower has to "at least  have some income" but which is somewhat vague.

What might be the general income gap a Cosigner will help a borrower overcome, or is it pretty broad-  as long as both incomes qualify together? Happy to say I don't  need a cosigner for the credit puposes. Thank you for any info.

Caroline Gerardo · Answer

SSI and Pension coming soon do not count. You have to be receiving the income.

Co- borrower and Co-signor are different things.

For conventional you want someone with no debt and big income. The lowest middle FICO score of the two is what counts. Work on getting your score up now.

FHA is supposed to be related but in today's world what does that really mean? Need GREAT explanation of how you are related.

Most people won't do this for you as they are married to the loan until you sell.

Jay Hurst · Answer

The co-borrower can provide virtually all of the income. More or less, your two debts and liabilities are thrown together and the debt to income ratio is what it is.   and I am not trying to come of snarky when I say this, but you have asked a lot of similar questions (and that is what these forums are for) but you need to speak with a competent lender and they should be able to tell you exactly  what YOUR scenario is instead of having to rely on general info. Lending is a very detailed oriented business.

Wyatt Wolff · Answer

So Ill hopefully help answer this in a few parts.

1/ There are a few different products you can use. If income is going to be a problem, you may have to cross collateralize a few of your properties. Am I understanding correctly that you own a few rentals, and also are currently renting yourself?

2/ SS and a pension are helpful. Rental income can also be used, just generally not all of it. I believe its product dependent, but you may be able to use as much as 75% of current rents as income. SS can be grossed up.

3/ Adding on a coborrower will only help you if that person has a strong income, and limited liabilities. Conventional, could be anyone on the loan with you. If you are going FHA, it has to be family. SOMETIMES, they will allow close friends with an interest in the borrower. I have never personally seen it, but I have heard of it.