A co-borrower signs the mortgage and shares the debt. A co-signer also signs for the debt but, in some programs, is not on the title and owns no part of the home. A non-occupant co-borrower signs for the loan and may be on the title, but does not live in the house. In every case, the lender can collect from that person if the payments stop.
That is the whole difference in one paragraph. The rest of this guide covers what it means for the deed, your credit, your debt-to-income ratio (DTI), and the published lender rules, so you can decide before you write an offer in the City of Richmond, Henrico or Chesterfield. This is general information, not legal advice. Ask a Virginia real estate attorney about your own situation.
Three roles, and which paper each one signs
Two documents matter at closing, and people mix them up. The note is the promise to repay. The deed says who owns the home. A person can be on one without the other.
- Co-borrower: signs the note, and usually goes on the deed because the buyers own the home together. Both incomes and both credit histories go into the application.
- Co-signer: signs the note but is not an owner. The Consumer Financial Protection Bureau (CFPB) says in its mortgage key terms page that a co-signer agrees to repay with you, must cover missed payments and, if you do not pay, the whole loan. It adds that some programs treat a co-signer as someone off the title with no ownership interest.
- Non-occupant co-borrower: signs the note and does not live in the home. Many lenders ask for this when the person who will live there needs help qualifying. This person may or may not be on the deed. That is a choice to settle with the lender and a Virginia real estate attorney before closing.
A person on the deed but not the note is a different case. They own part of the house but are not on the loan. Lenders often have rules about that, so ask the loan officer early. Our preferred lenders page lists lenders who can walk you through it.
What the published lender rules say
Fannie Mae’s Selling Guide has a section called Guarantors, Co-Signers, or Non-Occupant Borrowers on the Subject Transaction. On the Fannie Mae guide page, each of these is a credit applicant who is jointly liable on the note. Co-signers and guarantors have no ownership interest on the title, while non-occupant borrowers may hold title. None of them can have a stake in the sale, such as being the seller, the builder or the agent. The page covers purchases, limited cash-out and cash-out refinances.
The numbers on that page for a purchase where a non-occupant’s income is used:
| Rule | Figure on the page |
|---|---|
| Maximum loan-to-value, loan run through Desktop Underwriter | 95% |
| Maximum loan-to-value, manually underwritten | 90% |
| Down payment the occupying borrower must provide from own funds, manual underwriting | First 5% |
| Cap on the occupying borrower’s DTI alone in one listed exception | 43% |
| Maximum combined loan-to-value with a Community Seconds, where the Eligibility Matrix allows | 105% |
The page sends credit score and reserve minimums to Fannie Mae’s Eligibility Matrix, and its list of exceptions to the 5 percent rule may be longer than the version summarized here. Guide pages change, so treat these as a map for your conversation with a lender, not a quote for your loan.
For FHA, the HUD Single Family Housing Policy Handbook 4000.1 glossary separates a borrower from a cosigner. A cosigner only guarantees repayment and is not counted as a borrower. The same glossary defines a non-occupying borrower transaction as a loan with two or more borrowers where at least one will not live in the home, and it sets the minimum required investment at 3.5 percent of the adjusted value. The glossary does not give the FHA limits for non-occupant co-borrowers, so ask your lender for them and for the current handbook section.
For VA, the VA Home Loan Guaranty Buyer’s Guide says that in general the borrower must live in the home bought with the loan. It does not describe a non-occupant co-signer, so do not assume one is allowed.
Get the Richmond closing-timeline checklist
If a parent, sibling or partner will sign with you, the order of steps matters: who applies, who is on the deed, and when. We built a closing timeline for the Richmond area that shows each step. Pair it with a saved search so you see homes that fit the loan you can actually qualify for.
What it does to credit and DTI
DTI is your monthly debt payments divided by your gross monthly income. A lender looks at the debts of every borrower on the note. A co-borrower’s income can lift the buying power, and their debts count too.
- Credit: the new mortgage appears on every signer’s credit report. A late payment hurts everyone on the note, not just the person who lives in the home.
- The signer’s own future borrowing: the new payment is a debt for them. A parent who co-signs may see their own DTI rise when they apply for a car loan or refinance later.
- Underwriting: Fannie Mae’s page says Desktop Underwriter weighs income, assets, liabilities and credit for all borrowers regardless of occupancy. In manual underwriting the occupying borrower’s own DTI can matter by itself, and the 43% cap in the table is one example.
Questions to settle before you write an offer
- Who goes on the note, and who goes on the deed? Write both answers down.
- If the co-signer wants off later, what is the plan? Usually that means a refinance, and your rate then may differ.
- Does the co-signer have a written agreement with you about who pays what? A family agreement is not a lender document, so ask an attorney.
- Is the person you are asking connected to the sale? Fannie Mae’s page bars a seller, builder or agent from this role.
- What happens to the co-signer’s own plans, such as buying their own home, while they are on your loan?
Buyers in Short Pump or Midlothian face the same paperwork as buyers anywhere else, and the answers depend on the lender and loan type, not the address. Seller credits and closing cost limits also change by loan type, so read our guide to seller credits by loan type. Before you sign any agreement with a brokerage, read what to know before signing a buyer representation agreement. When you are ready to see homes, browse current listings.
Get the Richmond closing-timeline checklist
See each step from application to keys, including where a co-signer or non-occupant co-borrower signs. We will set up a saved search in the areas you pick, such as Henrico, Chesterfield or the City of Richmond.
Frequently asked questions
Can a co-signer be taken off the loan later?
Usually the loan has to be refinanced or paid off, because the lender agreed to the loan based on that person’s income and credit. Ask your lender what your loan allows before you close. A Virginia real estate attorney can help with the deed side.
What happens if the person living in the home stops paying?
The CFPB’s mortgage key terms page says a co-signer or co-borrower agrees to repay with you and must cover missed payments and, if you do not pay, the whole loan. Their credit and finances are at risk.
Can the seller, builder or my agent be the non-occupant co-borrower?
Not under the Fannie Mae guide page. It says a co-signer, guarantor or non-occupant borrower cannot have a stake in the sale, such as being the seller, builder or agent.
Does the co-signer’s credit score matter?
Yes. On the Fannie Mae page, minimum credit scores and reserves come from the Eligibility Matrix and depend on the loan-to-value and the combined ratios of all borrowers. Desktop Underwriter looks at the credit of all borrowers, whether or not they live in the home.
Can I use a non-occupant co-borrower on a VA loan?
The VA Home Loan Guaranty Buyer’s Guide says in general the borrower must live in the home. It does not describe non-occupant co-signers, so ask a VA-approved lender. Do not assume it is allowed.
Do I need a written agreement with my co-signer?
A lender does not set the terms between you and a family member. Putting who pays, who lives there and what happens on a sale in writing helps avoid disputes. Ask a Virginia real estate attorney to draft or review it.
Is a co-borrower the same as a co-applicant?
The CFPB key terms page does not define co-applicant, so check with your lender how it uses the word. In plain terms, anyone who signs the note is liable for the debt, and the deed is a separate question.
