As mortgage rates continue to increase, buyers are confronted with financing challenges. One way they are overcoming this obstacle is by enlisting the additional support of family members in the purchase process. Buyers are increasingly turning to parents and other family members as non-occupant co-borrowers in order to reduce their debt-to-income ratio and qualify for favorable rate terms.

The benefits of such an arrangement are many. The lender’s risk is decreased due to the added support in the form of a second borrower, which helps to offset any potential problems paying the loan off in the future. The secondary borrower’s additional income can also improve the ratio, eliminating the need to have a large down payment to qualify for the loan. This can give the primary borrower more flexibility and often result in a shorter path to homeownership with more favorable rate terms.

• Buyers enlist additional support from family members to reduce DTI
• Non-occupant co-borrowers provide added financial support
• Decreases lenders risk of borrower default
• Secondary borrower’s income can improve ratio without large down payment
• Offers more flexibility and often results in a shorter path to homeownership

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