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Joint Loans: What They Are And How To Get One

Victoria Araj3-minute read
UPDATED: December 20, 2023

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Joint loans allow you and another person – or more than one person – to share access to funds and the legal obligation to pay them back. With a joint loan, you may also be eligible for a higher loan amount or better term than if you were the sole borrower.

Be aware, though, that the shared benefits of joint loans come with shared responsibility. You should only take out a joint loan with someone you can absolutely trust.

Let’s explore how joint loans work and the implications of getting one.

What Is A Joint Loan?

A joint loan is a loan shared by two or more people, called co-borrowers or co-applicants. Each co-borrower on a joint loan is equally responsible for repaying it. Joint loans can come in various forms, including mortgages, auto loans and joint personal loans.

Borrowers opt to take out joint loans for many reasons. For one, a joint loan can increase your chances of approval if you’re concerned about qualifying for a loan on your own. Perhaps your credit score falls short of the required score for loan approval or the specific loan amount you need. In this case, a co-borrower with excellent credit or who brings with them another source of income may be able to help you secure the funds in the requested amount – and with an ideal term.

Joint loans are also a way for married couples to share assets. For example, if you want to purchase a home with your spouse, you could do so with a joint loan.

How Do Joint Loans Work?

Getting a joint loan is different from having a co-signer on a loan. Like a co-borrower, a co-signer can help someone with a lower credit score get approved for a loan, whether it be on the basis of the co-signer having a higher credit score or bringing their additional income to the table for consideration in the loan approval process. Unlike a co-borrower, however, a co-signer is only obligated to repay a loan if the primary borrower fails to do so. The co-signer also has no access to the loan funds.

Co-borrowers, as mentioned before, are just as responsible as the borrower for repaying a joint loan. For this reason, lenders look at every co-borrower’s information during the application process. Factors such as each applicant’s debt-to-income ratio (DTI) and credit history impact the lender’s final decision.

Upon approval, each co-borrower’s name will go on every loan document. If the joint loan is a mortgage or auto loan, all co-borrowers’ names will typically appear on the title as well. Every co-borrower has equal access to loan funds. If the loan’s purpose is to purchase an asset, all co-borrowers have equal ownership of that asset.

Benefits And Risks Of Joint Loans

While a joint loan can come with several advantages, co-borrowers also assume some risks. The table below highlights a few benefits and drawbacks to consider with joint loans.

Joint Loan Benefits

Joint Loan Risks

You may have a better chance of getting approved if one co-borrower has stronger credit.

Your chances of loan approval may be hurt if a co-borrower has weaker credit.

You may qualify for more loan options, a better term or a larger loan amount than you would on your own.

You may have more limited options since not all lenders allow joint loans.

Co-borrowers share responsibility for repaying the loan.

Each co-borrower’s credit score is at stake if one misses payments, makes late payments or defaults on their portion of loan.

Co-borrowers have equal access to funds.

Sharing financial responsibility can add stress to relationships.

How To Get A Joint Loan

If you and your co-borrower are ready to apply for a joint loan, you’ll need to take certain steps, which we’ll describe in detail next.

1. Review Your Financial Situation

Take stock of your own financial circumstances. Can you afford another monthly payment? How much can you afford to pay each month? How might your credit score impact your chances of approval?

You can check your credit to get an idea of what lenders will see when they review your credit history. AnnualCreditReport.com offers free weekly credit reports from each of the three main credit bureaus.

2. Find A Co-Borrower You Can Trust

Before applying for a joint loan, make certain your co-borrower is trustworthy and dependable. Consider asking a family member, spouse or close friend to co-borrow the loan. You should also be sure your co-borrower can afford a loan payment and won’t hurt your chances of approval.

3. Find Lenders That Allow Joint Loans

After you and your co-applicant agree you’re ready to move forward, you can look for a lender. Not all lenders offer joint loan options. Research different lenders to find out where joint loans are available.

4. Apply For Prequalification

When you have a few lenders in mind, check to see if they offer prequalification. If you apply for multiple loans, each lender will likely run a hard credit inquiry, which can hurt your credit.

When you apply for prequalification, however, lenders usually only do a soft credit check. Prequalifying lets you compare loan offers without multiple hard inquiries.

5. Choose A Loan Offer

Once you get prequalified with multiple lenders, you can evaluate your offers. See which lender offers the most flexible repayment term and lowest interest rate.

Then, choose a lender and loan offer based on this information.

6. Submit Your Loan Application

Once you and your co-borrower agree on a lender, you can submit your joint application. Gather the necessary documents, fill out the application and send it on. If you’re approved, the final step will simply be receiving your funds and beginning the repayment process.

Final Thoughts

A joint loan can be a suitable option for many reasons. A co-borrower could help you qualify for a larger loan than you could secure alone. Or maybe you and your spouse want to assume financial responsibility together. No matter the reason why a joint loan makes sense for you – if, in fact, it does – be sure you and your co-borrower are ready to take on a new payment.

Rocket LoansSM doesn’t offer joint loans at this time, but you can still see the loan rate and term you qualify for as the sole borrower. If you’re ready to get prequalified, start an application today.

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Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.