Filling in both sides
Fill in your side first: county, property type, gross monthly income, debts, credit score and cash. Then fill in the co-signer's side. Enter their gross monthly income and mark each source as taxable (wages, a pension that's taxed) or non-taxable (SSI, untaxed Social Security). Enter their monthly debts, and include their own rent or mortgage payment. That payment counts.
The results show two prices for FHA and Conventional: yours alone and yours with the co-signer. The gap between them is what the co-signer adds.
How a co-signer changes the math
Lenders add the two incomes together and add the two sets of debts together. Then they run the same ratios as always: on FHA, the house payment can be up to 46.9% of combined gross income and all payments up to 56.9%. On Conventional, total payments can reach 50%.
Why SSI counts for more than its face amount
Income that isn't taxed goes further than a paycheck of the same size, so lenders gross it up. FHA adds 15% and Conventional adds 25%. A $1,500 SSI check counts as $1,725 on FHA and $1,875 on Conventional.
Who can co-sign and what they sign
A parent, grandparent or other relative can co-sign on FHA with the same 3.5% down, or $0 down with FHA 100% financing. The co-signer signs the note and shares responsibility for the loan. They don't go on the deed and they don't move in. Most of AAA Capital Funding's approvals have a co-signer on them, so this is routine work for us.
Down payment rules shift a little with a co-signer. On Conventional, Fannie Mae caps a loan with a non-occupant co-signer at 95% of the value through automated underwriting, so the buyer puts 5% down. On FHA, a non-occupant co-signer on a 2 to 4 unit home caps the loan at 75% of the value, which means 25% down.
A grandmother on SSI
A buyer earns $3,900 a month and has a $375 car payment. Alone, FHA allows $1,829.10 for housing (46.9%). In Broward at 5.75% with 3.5% down, that's a price of about $222,000.
Her grandmother receives $1,500 a month in SSI, owns her home free and clear, and has no debts. FHA grosses the SSI up to $1,725, so combined income is $5,625.
| Buyer alone | With grandmother | |
|---|---|---|
| Counted income | $3,900 | $5,625 |
| Max housing payment (46.9%) | $1,829.10 | $2,638.13 |
| Max after debts (56.9% less $375) | $1,844.10 | $2,825.63 |
| FHA price | about $222,000 | about $338,200 |
The housing ratio is the limit in both columns. The grandmother adds about $116,200 of buying power without touching her own home or moving.
On Conventional, the same SSI grosses up to $1,875. The room for a house payment at 50% total goes from $1,575 to $2,512.50.
After you see the gap
If the co-signer closes the gap, run the higher number through the price check on homes you like. For a duplex, run the house hacking calculator too. Rent from the other unit counts as income, and with a co-signer on FHA the 25% down rule above applies. The co-signer guide covers the documents each side needs.
Bring both of you to the conversation. Call AAA Capital Funding at 888-601-8344 and we'll walk you and your co-signer through the numbers together, so everyone signs knowing exactly what the loan looks like.