Getting approved for a mortgage can be tough in today’s housing market—especially for first-time buyers with limited income or credit history. That’s where co-signers come in. Co-signing a mortgage is a big decision with real financial consequences. Whether you’re helping your child, sibling, or friend buy a home, it’s important to understand exactly what this role entails.

Let’s break it all down in plain English.

What Is Co-signing a Mortgage?

When you co-sign a mortgage, you’re agreeing to take full legal and financial responsibility for the loan—right alongside the main borrower. Even if you’re not living in the home or paying the bills, the lender sees you as equally responsible. That means if the borrower can’t keep up with the payments, you’re on the hook.

In Canada, co-signing is becoming more common, especially among parents helping their adult children get into the housing market. But it’s not just a signature—it’s a long-term commitment.

Co-signer vs. Guarantor: What’s the Difference?

These terms often get tossed around interchangeably, but they’re not the same:

A co-signer is added to the property title and shares ownership. They’re a full co-borrower.
A guarantor isn’t on the title but agrees to cover the mortgage if the borrower defaults.

Lenders often prefer co-signers over guarantors when the additional person’s income or credit is needed to qualify for the loan. Keep in mind, being on the title as a co-signer could make you ineligible for certain programs like first-time buyer incentives.

Ownership Structures to Consider

If you’re going in as a co-owner, there are two ways to structure the ownership:

Joint Tenancy with Right of Survivorship (JTWROS): Everyone owns the property equally. If one person dies, their share automatically transfers to the others.
Tenants in Common: Each owner has a specific percentage based on their contribution. If one person dies, their share goes to their estate, not the other owners.

Talk to a lawyer about which one makes sense for your situation.

Benefits of Co-signing a Mortgage

Increased borrowing power: Helps the borrower qualify for a higher mortgage amount.
Better interest rate: A co-signer with strong credit can get the borrower a lower rate.
Credit building: When payments are made on time, it helps the primary borrower’s credit history.

But There Are Big Risks, Too

Full responsibility: If the borrower can’t pay, you have to—no exceptions.
Credit impact: Missed or late payments will affect your credit score.
Limits your own borrowing: That mortgage counts as your debt, too, which could affect your ability to qualify for loans, buy a car, or refinance your own home.
Long-term entanglement: You can’t just “remove yourself” from the mortgage. It usually involves refinancing or a legal process.

Who Can Co-sign in Canada?

Most lenders look for co-signers who:

Have a strong credit score (usually 680+)
Are Canadian residents
Show stable income and low debt
Are up to date on their taxes

The Co-signing Process in Canada

Talk it out: Have a clear conversation about expectations, responsibilities, and “what if” scenarios.
Get assessed: The lender will review your finances as if you’re applying for the mortgage yourself.
Review ownership structure: Decide if you’ll go on title (co-signer) or not (guarantor).
Get legal advice: It’s wise for co-signers to get independent legal advice before signing anything.
Sign the paperwork: If approved, you’ll sign the mortgage documents along with the main borrower.

Removing a Co-signer Later On

If things go well and the primary borrower improves their finances, they might be able to refinance the mortgage in their name alone. This process requires qualifying on their own, and possibly paying legal fees. In special cases—like a divorce—some lenders may allow a co-signer to be removed without refinancing.

FAQs About Co-signing in Canada

Can co-signing hurt my credit?
Yes—if payments are missed, your credit will be impacted.

Can I co-sign without being on the title?
Yes, that would make you a guarantor—not a co-signer.

What happens if I want out later?
You’ll usually need to refinance the mortgage to remove your name.

Can co-signing affect my ability to get another loan?
Yes. The mortgage counts toward your debt-to-income ratio.

Final Thoughts: Should You Co-sign?

Co-signing a mortgage is a generous gesture—but it’s not a small favour. You’re taking on real financial risk. If you trust the borrower and you’re confident in their ability to keep up with the payments, it could be a meaningful way to help them get into a home.

Just make sure you know what you’re signing up for.

🤝 Thinking About Co-Signing a Mortgage?

Whether you’re helping a child, sibling, or friend, co-signing a mortgage is a big commitment. Talk to a mortgage expert to understand the risks, responsibilities, and how to protect yourself legally and financially.

Talk to a Mortgage Expert