What does it mean to co-sign a mortgage?

Feb 3

Renee Huse, founder of Spire Mortgage Team in Alberta, has helped hundreds of families navigate one of the most emotionally complex decisions in homeownership: whether or not to cosign a mortgage for someone else.

Maybe it’s your child trying to break into Calgary’s hot housing market. Maybe it’s a sibling who needs a leg up in Red Deer or Grande Prairie. Either way, the question is the same: Is cosigning the right move?

Cosigning a mortgage can open big doors. But it also puts your credit, your finances, and your future borrowing power at risk. Here’s what every Albertan needs to understand—before they sign.

What We’ll Cover:

What does it mean to cosign a mortgage in Alberta?
The risks: financial, legal, and personal
The rewards: wealth building, stability, and early homeownership
Alberta case study: When cosigning worked—and when it didn’t
5 questions you must ask before you cosign
Cosigning vs. gifting: Which is smarter?
Glossary of key mortgage terms
FAQs about cosigning in Alberta

What Does It Mean to Cosign a Mortgage in Alberta?

When you cosign a mortgage, you are not simply offering moral support—you are taking on full legal responsibility for the mortgage loan. That means if the primary borrower misses a payment, defaults, or faces foreclosure, you’re financially and legally responsible for that debt.

Lenders will factor this cosigned mortgage into your own credit report, which can affect your ability to qualify for loans or mortgages in the future. In Alberta’s conservative lending environment, where banks and insurers are strict, that’s a big deal.

The Risks of Cosigning a Mortgage

Credit Score Damage

If the borrower makes a late payment or defaults, it will be reported on your credit report too. Even one missed payment can seriously harm your score, especially if you’re looking to make a big move yourself in the next few years.

Reduced Borrowing Power

Cosigning increases your debt-to-income ratio—a key factor in any mortgage approval. It may reduce your ability to qualify for your own property, a second home, or even a refinance.

You’re Legally on the Hook

Cosigning makes you financially responsible for the full loan. If the borrower walks away or gets behind, you could be required to step in—sometimes for years.

Relationship Strain

Money is emotional. If things go south, relationships can suffer. We’ve seen parent-child bonds become strained and lifelong friendships tested.

Why Cosigning Can Be a Smart Move in Alberta

There’s another side to this coin—and when it’s done thoughtfully, cosigning can be a powerful financial strategy.

Faster Market Entry

Home prices in Alberta’s major centres like Edmonton and Calgary continue to rise. Cosigning helps someone you care about get into the market sooner—before prices move further out of reach.

Build Equity Instead of Paying Rent

Even if the home doesn't appreciate wildly, every mortgage payment chips away at the principal. That’s real money going back into their pocket—not a landlord’s.

Rent Is 100% Interest

Unlike rent, which builds no equity, a mortgage builds long-term value. Over 5 years, a typical mortgage in Alberta can knock off tens of thousands in principal.

Reduces Constant Moving Costs

Renters often bounce from rental to rental. Helping someone own means fewer moves, less stress, and more stability.

Stability Breeds Growth

We’ve seen it time and again: Homeownership brings confidence. People focus better, budget smarter, and often grow into better financial habits once they’re invested in a place they own.

“Helping our daughter buy her first home in Lethbridge gave her so much confidence. She stopped jumping from rental to rental and started focusing on her career—and she’s already built $45,000 in equity.”
— Jennifer, proud cosigner and mom

Alberta Case Study: When Cosigning Worked—and When It Didn’t

Success: Lisa from Airdrie

Lisa cosigned her daughter’s $330,000 mortgage with a 10% down payment.
They set up a joint account to ensure all bills were paid.
Her daughter advanced in her career, and three years later, she refinanced Lisa off the mortgage.
Rate: 3.99% (insured 5-year fixed)
Monthly Payment: ~$1,740 (25‑year amortization)
Outcome: Lisa’s credit stayed strong. Her daughter built $62,000 in equity and gained independence.

Failure: Mike from Red Deer

Mike cosigned a $480,000 mortgage for his son, who planned to Airbnb the property.
Inconsistent rental income and poor money management led to three missed payments.
Rate: 4.34% (conventional 5‑year fixed)
Arrears Owing: $16,000
Outcome: Mike’s credit dropped by 110 points. His own HELOC application was denied. The relationship is now strained.

5 Questions You Must Ask Before You Cosign in Alberta (And Why They Matter)

Before you sign anything, have this conversation. These five questions will help you gauge the risk—and protect your relationship.

Can we open a joint account to monitor all payments (mortgage, tax, insurance)?
Why: If your name is on the loan, you deserve real-time visibility. A joint account ensures payments are made and gives you peace of mind.
What’s your plan if your income drops or job changes?
Why: Alberta’s job market can be volatile. You need to know they’ve thought through a backup plan (roommate, second job, emergency fund).
Can you fund 2–3 months of housing costs as a safety buffer?
Why: A savings cushion shows financial maturity—and protects your credit if something goes wrong.
What’s your 1/3/5‑year plan to grow income and remove me from the mortgage?
Why: Cosigning should be temporary. If they can’t outline how and when they’ll refinance you out, that’s a red flag.
Is this home for living, renting, or flipping—and what’s your end goal?
Why: Different intentions come with different risks. You need to understand what you’re really signing up for.

Bottom line: If they can’t answer these questions clearly, it’s not time to cosign.

Cosigning vs. Gifting: Which Is Smarter?

Feature	Cosigning	Gifting a Down Payment
Credit Risk	Yes – fully responsible	No – not tied to the mortgage
Future Borrowing Impact	Yes – affects your debt ratio	No – doesn’t appear on credit
Legal Responsibility	Full liability	None
Relationship Risk	Higher if things go wrong	Lower, especially with clear terms
Equity Ownership	No, unless on title	No, unless structured legally

Glossary

Cosigner – Someone who agrees to be legally responsible for a mortgage if the borrower can’t pay.
Default – Failure to meet mortgage obligations, including missed payments.
Debt-to-Income Ratio – The portion of your income used to pay debt. Affects mortgage approval.
Foreclosure – Legal process where the lender takes ownership of a property due to default.
Credit Score – A numerical score reflecting your credit history and risk to lenders.
Amortization – The total length of time to repay the mortgage (often 25 or 30 years).
Refinance – Replacing an existing mortgage with a new one—often to remove a cosigner.
HELOC – Home Equity Line of Credit. A revolving loan secured against your home equity.
Joint Account – A bank account shared by two or more people.
Appreciation – Increase in a home’s value over time.

FAQs About Cosigning a Mortgage in Alberta

Can I be removed from the mortgage later?
Yes—if the primary borrower qualifies for a refinance on their own.

Does cosigning make me a co-owner of the property?
Not automatically. Legal ownership is determined by who’s on title, not the mortgage.

Will lenders count the cosigned mortgage when I apply for a loan?
Yes. It impacts your credit and debt ratios as if it were your own loan.

Is there a safer way to help my child buy a home?
In many cases, gifting a down payment or co-buying with a clear agreement may be smarter.

Can I set boundaries even if I’m cosigning?
Absolutely. In fact, you should—ideally in writing, with a clear exit plan.

Let’s Talk Strategy

Still unsure if cosigning is the right move? Give us a call or fill out an application at this link: https://spiremortgage.ca/apply-now and our team will get in touch with you to start building a plan that suits you.

Renee Huse