Co-Signers on Other Debts
Why co-signed loans still count against your DTI — even if you're not the one making the payments.
Many borrowers are surprised to learn that co-signed loans still count as their responsibility. Even if the borrower is not making the payments, the lender may still include the debt in the DTI calculation.
This situation often occurs when someone co-signs for a child's student loan, a family member's car loan, or a friend's credit account.
Unless there is documented proof that another person has made the payments consistently for at least 12 months, lenders may treat the debt as the borrower's obligation. This can dramatically increase DTI ratios.
In some cases, borrowers only discover the impact of co-signed debt after the underwriting process has started. The fix is documentation: 12 months of cancelled checks or bank statements showing the other party making the payments can allow the lender to exclude the debt from DTI.