Co-borrower vs. Co-signer – What’s the difference?

In many cases, you won’t be buying a home alone. You may have a significant other who will also be involved. Or maybe you have a parent or family friend who is willing to co-sign the loan and help you qualify or get a better interest rate.

There are two different types of “partnerships” when it comes to home loans, co-borrowers and co-signers. Co-borrowers have their name on the title of the house, their name is on the loan, and they’re obligated to repay the debt. Co-signers do not hold ownership in the property, but they are liable for the repayment of the home loan.

In both cases, co-borrowers & co-signers are responsible for signing all documents and their income, assets, liabilities, and credit score can be used in qualifying for the loan. Their presence can also affect pricing, so if your credit score is low, having a co-signer with a significantly higher score is a great way to get a better interest rate.

Having another person on the loan can carry a lot of benefits, especially if they are complimentary. Say you have a big pile of cash, but a moderate credit score & you’re self-employed. Having a co-borrower with a high credit score and consistent income can be a game changer – suddenly your interest rate is better & qualifying becomes much easier.