Is a Co-Applicant Mandatory for a Home Loan?

Co-application refers to a loan arrangement where two or more individuals meet the responsibility of loan repayment. Home loans create a significant financial responsibility, which a primary borrower can share with another family member financially capable of sharing the borrowing responsibility.

Accordingly, the applicants must submit the documents required for co-applicant for home loan to prove eligibility.

An individual who is looking for a home loan along with the primary borrower is a co-applicant for that loan. A co-applicant need not necessarily be a joint or co-owner of the property, and can only agree to share the repayment responsibility.

Hence, if you do not own the property, you can still apply for a home loan as a co-applicant. However, individuals who manage to meet all home loan eligibility criteria can avail of a home loan without a co-applicant.

Contrarily, an individual who is a joint owner of the property must be a co-applicant. Only individuals tied by designated relationships to the borrower can become co-applicants for the home loan. They include:

• Son and father: If a father applies for a home loan with his only son as a co-applicant, he can be the primary borrower. Both the incomes of father and the son will be considered to determine the repayment capacity during loan assessment and approval. Moreover, in this co-application, the two must be the joint owners of the property.
  If the father applies for a home loan with one of his two or more sons, he should not share property ownership as such property is liable to be passed on to all sons equally as a part of inheritance. Thus, only his income would be considered for the purpose of co-application.
• Brothers: Two brothers can apply for a home loan together as co-applicants, combining their incomes to avail of favourable loan terms and sharing the repayment responsibility. To be eligible as co-applicants, they must stay together and plan to do so in the new property too.
• Unmarried daughter and father: An unmarried daughter can avail of a home loan with her father as the co-applicant. Here, only the father’s income is considered for loan approval, and he does not share ownership of the property.
• Unmarried daughter and mother: Here, both mother and daughters can be co-applicants to the home loan, where the mother shares only the repayment responsibility and not joint property ownership.
• Wife and husband: A spouse, whether a wife or husband, can also serve as a co-applicant for home loan and contribute to higher loan eligibility for favourable terms.

Co-application of home loan comes with several unique benefits that a borrower may not be able to avail of singlehandedly. Adding a co-applicant to one’s home loan application combines the eligibility of both individuals to improve the total eligibility, repayment capacity, and creditworthiness, allowing better chances of loan approval, competitive rates, high-value financing, and securing other favourable terms.

No rule or law legally makes the availability of a co-applicant mandatory for home loan in India. Co-application is however, favoured due to improved loan eligibility and diversification of the risk involved in lending from one borrower to two or more borrowers.

It is ideal to select individuals with a steady source of income and a high credit score as co-applicants to apply online for favourable terms on the advance.