When people cosign for a loan or credit card for a friend or relative, they often do not realize what an important favor they are actually granting. Cosigning can have a significant impact on your credit rating even if all of the payments are made on time. This is because lenders evaluating you for credit will include those cosigned loans and credit lines in your debt-to-income ratio, on the assumption that you may have to repay the balances. In many ways, it is as if you yourself have taken out the line of credit or the loan.

Considering this, and depending on the amount of the home loan you cosign for as well as your personal income and assets, you may be hurting your chances for your own home loan. Unlike cosigning for a small personal loan or even a car, a home loan usually turns out to be the single largest loan most people will ever take out. And the possibility of, technically, ending up having two of them at the same time is not likely to help your chances of being approved for your own loan.

Before you decide on whether or not to cosign for this home loan, you may want to discuss the possibility with a lender--not with the lender on the cosigning, but with a lender that might be able to offer you yourself a home loan. Since each lending institution can vary greatly in its lending practices, the ultimate answer to your question will rest with whatever lender you pursue.

For more information, you may want to read, "Prepare Your Credit Before Buying a Home."