Cosigning feels like a signature. To a mortgage lender it's a car payment on your own record, and to the auto lender it's a promise to pay if the borrower doesn't. Enter the loan and your finances to see how much house you could lose the ability to buy — and what you'd owe if the car were repossessed.
When you cosign, the auto loan appears on your credit report as your debt, with the full monthly payment. Mortgage underwriters add that payment to your debt-to-income ratio just as if the car were yours. Because every dollar of monthly debt is a dollar that can't go toward a house payment, a $525 car payment at a 7.18% mortgage rate removes roughly $77,000 of borrowing — about $86,000 of home price with 10% down.
There is a way out for conventional loans. Fannie Mae lets a lender exclude a cosigned debt from your ratios if the other person has been making the payments and you can document 12 months of their payments with no late ones — usually their bank statements or canceled checks. Until there's a clean year of payments on paper, plan on the payment counting against you.
As Experian explains, a cosigner is equally responsible for the loan. If payments stop, the late payments land on your credit report too, and if the car is repossessed, the lender sells it, usually at auction, and both of you owe the shortfall plus fees. The repossession stays on both credit reports for seven years. Early in a loan, when the balance is high and the car has just taken its biggest depreciation hit, that shortfall is at its largest.
The full guide: Will Cosigning a Car Loan Affect Buying a House?