About Co-Borrowers

• A co-borrower signs your loan document and agrees to be responsible for its full balance. Unlike a co-signer, however, the co-borrower has ownership interest in any property that secures the loan, such as a home or vehicle. In addition, while a co-signer isn't liable for making payments on a loan unless the primary borrower defaults, a co-borrower has the same responsibility for making payments as the primary borrower.
  
  

Increasing the Loan Amount

• In some cases, including a co-borrower may increase the amount of the loan you can receive. When you apply for a loan with a co-borrower, the lender considers both applicants' incomes when determining the loan amount he'll offer. If the co-borrower earns an income and lists it on the application, your loan amount may be higher than it would have been without him.
  
  

Decreasing the Loan Amount

• Though a co-borrower's income may increase your loan amount, her liabilities can also decrease it. Most lenders consider the ratio of the co-applicants' total monthly debt to total monthly income when determining the amount of money the applicants can borrow. If your co-borrower has other debts, they may increase the debt-to-income ratio to an unacceptable level. If the ratio is too high, you may qualify for a lower loan amount than you could have received on your own.
  
  

Interest Rates

• Co-borrowers may also affect the interest rate a lender offers you. If the co-borrower has a solid credit history, the lender may offer you a lower interest rate than you would have received if you applied alone. However, if the co-borrower has poor credit, your interest rate may increase or the lender may deny your application altogether. If your co-borrower has poor credit and you have sufficient income to qualify for the loan by yourself, it may be more beneficial to apply without him.