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What Is a Joint Mortgage?

Updated March 30, 2022
Christy Bieber
By: Christy Bieber

Our Mortgages Expert

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If you are purchasing a home with another person, you may be interested in a joint mortgage. A joint mortgage is a mortgage loan you share with someone else. In joint mortgages, you share legal responsibility for the loan with the other co-owners of the home.

There are many benefits to joint mortgages. For example, a joint mortgage could help you buy a home you might not be able to afford on your own. But there are also downsides to consider.

Whether you're a first time home buyer or a seasoned pro, it's important to understand what's involved in securing a joint home loan. If you've been wondering, "How do joint mortgages work?" you're in the right place. Here's what you need to know.

What is a joint mortgage?

A joint mortgage is a mortgage multiple parties obtain together. The finances of each co-applicant determine loan approval and loan terms. All of the parties on the joint mortgage share legal responsibility for paying back the loan.

Note that joint mortgages are not the same thing as joint ownership. The mortgage determines who makes loan payments -- the property title determines who owns the property.

Individuals often take out a joint loan with a partner, but there could be more people involved. There's usually a maximum of four parties (although this varies by lender). Usually, when multiple people take out a joint mortgage, they will all share the ownership of the property they're borrowing to buy.

How does a joint mortgage work?

In a joint mortgage, all co-mortgagees are legally responsible for the entire loan. This means if you and a friend each agree to pay half the loan, and your friend goes broke, the lender could try to collect the entire payment from you.

Also, lenders consider the credit score and risks of both borrowers when deciding loan rates and terms. If your co-borrower has a good credit score and substantial income, their success could help you score a good rate. On the other hand, if your co-borrower has poor credit, it could hurt your ability to get approved for a loan.

When you apply for a joint mortgage, you and the other person(s) you're sharing the loan with will each submit an application. The lender will review several key qualifying criteria from each co-borrower, including:

If the lender approves your joint mortgage loan, you will each sign the promissory note. At that point, you each become responsible for making payments. You'll generally have to make just one joint monthly payment. Take some time to decide who should send in payments.

If you're considering taking out a joint mortgage paid by one person, make sure the non-paying borrower(s) on your mortgage know their responsibilities. The lender can legally pursue any or all of the borrowers for payment, even if those borrowers weren't originally planning on contributing to paying off the loan.

Only take out a joint mortgage with someone you trust. Joint mortgages are often used by couples to purchase a home together, but they don't have to be. You can secure a joint mortgage with parents, friends, or co-investors.

Which credit score is used for a joint mortgage?

When individuals apply for joint mortgages, the lender looks at the credit scores of all applicants. Since your credit score impacts your mortgage rates, you'll want to make sure you and all co-borrowers have done everything you can to improve your credit before borrowing.

Lenders may be more willing to lend to a bad-credit borrower if the other borrower(s) have good credit. However, they'll still consider it to be a riskier loan. One borrower's bad credit could affect both your ability to secure a loan and the rate you are offered.

Will my credit score be affected?

Yes: Joint mortgages with co-borrowers show up on each borrower's credit report. If you pay it responsibly, it can help to raise your credit score. But if you or your co-borrower miss a payment, it can adversely affect both of your credit scores.

When you apply for a joint mortgage, the lender will make a hard inquiry on your credit report. Too many hard inquiries can have a small negative impact on your credit score. However, many lenders allow you to shop around and get pre-qualified for a loan without a hard credit check. This allows you to compare loan terms and find the best mortgage lenders without worrying about harming your credit.

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Should you get a joint mortgage?

There are both advantages and disadvantages to joint mortgages. Here are some reasons you may or may not want a joint mortgage:

Advantages of a joint mortgage

  • Possible better rate: You may be able to qualify for a mortgage loan at a better rate if your co-borrower has solid financial credentials.
  • Larger loan: You may be able to borrow more than you could afford alone. The lender considers your combined income when determining whether to approve your loan.
  • Shared responsibility: You and your co-borrower share legal responsibility for the loan. If you are buying a house with someone, you can ensure you're both on the hook to pay for it.

Disadvantages of a joint mortgage

  • Possible lower rate: If your co-borrower has a lot of debt or a low credit score, you may not be able to get approved for a loan at a favorable rate.
  • Credit risk: You could face consequences, including damaged credit and legal action, if the co-borrower doesn't live up to his or her repayment responsibilities.
  • Ownership confusion: Joint borrowing doesn't always mean joint ownership. You'll want to make sure your name is on the title and deed to the house so you are a co-owner of the home as well as a co-borrower on the mortgage.

Before taking out a joint mortgage, make sure you understand the difference between a promissory note and the title and deed of the home. You probably won't want to commit to paying back a home loan if you don't have a legal ownership interest in the property.

If you are considering purchasing a house with another person, a joint mortgage often makes the most sense. But consider the impact of co-borrowing on your ability to secure a loan when you decide what's right for you.

Once you've done that, be sure to shop around and compare current mortgage rates to find a loan that's right for all parties involved.

Still have questions?

Here are some other questions we've answered:

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FAQs

  • A joint mortgage is a secured loan multiple parties obtain together to purchase a home. All co-borrowers are jointly responsible for repaying the loan and the lender considers the credentials of each one when determining loan terms and rates.

  • All co-borrowers are responsible for repayment, and every borrower's credit can be affected by late payments from one co-borrower. Note a joint mortgage doesn't confer joint ownership of the home.

  • A joint mortgage can be a good idea if you want to buy a home with someone else and share legal responsibility for paying off the mortgage. If your preferred co-borrower has strong financial credentials, applying jointly can help you secure a better home loan.

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