Having two people on a loan, often called a co-borrower or joint application, can be advantageous as it typically increases the likelihood of loan approval and potentially leads to better loan terms, such as a lower interest rate [1, 2, 4]. Lenders view two incomes and two credit histories as less risky than one, provided both applicants have good credit and stable financial situations [1, 2].
As long as you qualify for the loan, then you're fine. Adding someone brings in their credit score, debts, as well as income. If you don't need their income (or their debts negatively affect the loan), then there's really no reason to have them added.
The 2-2-2 credit rule is a guideline lenders use to assess a borrower's creditworthiness, requiring two active revolving credit accounts, open for at least two years, with a history of on-time payments for those two consecutive years, often with a minimum limit of $2,000 per account, to show financial stability for larger loans like mortgages. It demonstrates you can handle multiple credit lines responsibly, not just have a good score, building lender confidence.
In some cases, you may need a co-borrower to be approved for a loan. This can happen if your income isn't high enough, your credit history is short, or your credit score is low. Adding a co-borrower who is in a more stable financial situation can boost your chances of getting approved.
If the cosigner has better credit, cosigning the loan might also help lower the interest rate. Common examples of loans that may include a cosigner include car loans, mortgages, student loans, or apartment leases.
A joint application combines the income and debt of both applicants, which can increase your borrowing power. However, if one applicant has a high debt-to-income ratio, it may negatively affect the application.
Adding an authorized user can also benefit the primary cardholder by organizing expenses, maximizing rewards earnings and more. Potential drawbacks associated with authorized users include possible fees, unequal financial responsibility, credit score impact and more.
For a $40,000 loan, you generally need a good to excellent credit score (670+ on FICO, or 660+ on Equifax/Experian in the US/AUS) for favorable rates, though lenders may approve with scores as low as 610-640 (around 625-660 on Experian/Equifax) or even lower for larger amounts, often requiring higher income, lower debt, or a cosigner. Higher scores (700+) secure better terms, while lower scores (below 600) might get approved but at much higher interest rates, notes Experian and ClearScore AU.
Using this free income calculator, the approximate income you need to buy a $500,000 home, assuming you need a $400,000 loan, is $77,000 gross per year, excluding superannuation.
Cons of a joint loan
The shared-responsibility that comes with a joint loan can help you to borrow a larger amount of money. However, you and your partner must understand that you are both 100% responsible for repaying the loan regardless of any change in circumstance.
By paying more than your required monthly mortgage payment, you can put that extra money directly toward the principal amount on your loan. Your interest payment is based on your principal balance, so by applying your extra payment to your principal, you could pay less in interest over time.
While the exact range for a bad credit score in Australia can depend on the credit scoring model, usually a score between the range of 300-550 is considered a bad credit score.
For instance, let's say you had a $5,000 monthly credit limit on your credit card. According to the 30% rule, you'd want to be sure you didn't spend more than $1,500 per month, or 30%.
Frequent Changes in Address: Applicants who provide multiple addresses in a short period or who frequently change residences might be attempting to obscure their true identity or financial history. Large down payments can also be a red flag for potential occupancy fraud.
Cons. Shared liability: Both borrowers are equally responsible for payments and one individual's financial responsibility affects the other. Late or missed payments hurt both individuals' credit. Difficulty removing a co-borrower: You usually have to refinance the loan to remove a co-borrower.
There isn't a specific score needed to get a mortgage, because there isn't a universally recognised credit score. When you apply for a mortgage, lenders look at a number of factors to assess your risk and work out if you'll be able to make the repayments without struggling.
To buy a $650,000 house in Australia, you generally need a gross annual household income between $100,000 to $140,000, with figures varying significantly by location and lender criteria, requiring a strong deposit (around $130,000 for 20%) and managing loan repayments to not exceed 30% of your income to avoid mortgage stress, often necessitating a joint income or substantial savings, as highlighted by financial experts and data from sources like Fundd, Finder, and Real Estate.
On a $100k salary in Australia, you might borrow between $330,000 and $600,000, but it highly depends on lender policies, interest rates, existing debts (car, credit cards), living expenses, and deposit size, with many lenders using serviceability buffers, suggesting figures closer to the lower end, while others might offer more if you have minimal expenses and debt. Use an online borrowing calculator from banks like NAB, CommBank, or ING for a personalized estimate.
There's no single minimum income to buy a house; it depends heavily on location, home price, deposit size, interest rates, and debt, but lenders often look for your total housing costs (mortgage + taxes + insurance) to be under 30% of your gross income, with examples showing major city buyers might need $100k-$200k+ in annual income, while more affordable areas could require less, like $70k-$90k, especially with a partner, as seen in reports from Australia by Finder and Domain in 2025 https://www.finder.com.au/home-loans/minimum-income-by-suburb-calc,.
Improving your credit in 30 days is possible. Ways to do so include paying off credit card debt, becoming an authorized user, paying your bills on time and disputing inaccurate credit report information.
What Is a Bad Credit Score? A bad credit score is a FICO® Score Θ below 580. A bad VantageScore® credit score is a score below 600. That said, lenders may have different ideas of what a bad credit score is when they're reviewing a loan application.
Your payment history accounts for 35% of your credit score, making it the most important factor. The later the payment, and the more recent it is in your credit history, the bigger the negative impact to your score. Plus, the higher your score is to start, the worse of a hit it will take.
Being added as an authorized user can help you build or improve your credit, but in some cases you may notice a drop in your credit score. This often happens when the account is not in good standing, perhaps because of late or missed payments or a high balance.
Many scoring systems look at the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, it will probably hurt your score. How long have you had credit? A short credit history may hurt your score, but paying bills on time and having low balances can offset that.