Someone who legally guarantees your loan but doesn't take ownership or live in the home. Used when the primary borrower can't qualify alone, often a parent helping a child.
A co-signer is someone who takes on legal responsibility for your mortgage without taking ownership of the home. If you can't make payments, the lender can pursue the co-signer for the full balance.
Most commonly, a co-signer is a parent helping an adult child qualify for their first home. The co-signer's income and credit help the borrower meet qualification ratios, but the co-signer doesn't go on the deed and doesn't live in the home.
Important distinction: a co-borrower shares ownership and lives in the home; a co-signer just guarantees the loan. Co-signers should know they take on real risk — the loan appears on their credit report, can affect their own ability to borrow, and they're on the hook if the primary borrower defaults.
Example
A 28-year-old with $75K income but limited credit history wants to buy a $400K home. Her parent (high income, excellent credit) co-signs. Their combined finances qualify the loan. The daughter goes on the deed and lives there; the parent doesn't, but is legally liable if payments stop.
Also known as
non-occupant co-borrower, guarantor