The carefully laid plans of newlyweds Kevin T. and Susan L. O'Shea to move into their new home over the Memorial Day weekend nearly unraveled.

Their lender wanted to delay settlement until Susan O'Shea could produce actual pay stubs from an accounting firm job she will begin in July. The couple had mistakenly believed a letter from her future employer guaranteeing the job would suffice.

Nor was the lender impressed that the couple could almost qualify for a loan on the $107,000 Reston condominium on the strength of 29-year-old Kevin O'Shea's income as a service manager for a local bank.

The lender was "worried about the worst case of what would happen if she did not go to work," Kevin O'Shea said.

The lending company finally approved the deal, however, when Kevin O'Shea's grandfather, Clarence M. Trinkle, volunteered to cosign the mortgage.

By adding his signature to the closing documents, Trinkle agreed to make good any missing payments or, in the event of a default, pay any money still owed the lender after the foreclosure sale.

"I like to help all of my grandchildren when I can," Trinkle said. "I'm glad to do it and I'm sure they can make {the loan payments}."

A cosigner, sometimes referred to as a co-borrower, is an old standby in the real estate business. They are called upon when borrowers do not have enough income in the eyes of a lender to qualify for a particular loan amount. Washington-area lenders say it is an option that first-time home buyers in the high-priced local housing market often overlook and might consider as they search for ways to become homeowners.

Occasionally, the cosigner contributes to the monthly payments, but generally the buyers manage to make the payments themselves, said Pam McCoach, a Fairfax City real estate agent.

"When borrowers need cosigners it does not mean that these people cannot afford the payments. It just means that they do not fit the traditional {lending} guidelines of a lender. People do not live generic lives, and loan profiles are generic," McCoach said.

Typically, first-time buyers need the added edge that a co-signature provides. Dan Hague, a Silver Spring real estate agent who largely concentrates his sales efforts on the entry-level town house market, said that about 5 percent to 10 percent of his customers bring in a cosigner.

A cosigner can also shore up a borrower's questionable or nonexistent credit rating, another factor a lender relies on to size up a buyer's creditworthiness.

Or a co-signature can offset the fact that a borrower is short on assets, said Dave Hershman, regional vice president of American Residential Mortgage Corp. After covering the down payment and closing costs, a borrower may not have two months of mortgage payments in reserve as many lenders now require.

The cosigner relationship is rather one-sided, said Richard C. Eisen, a local real estate attorney. "The cosigner does not really get anything out of it other than doing a favor for a friend or relative," he said.

About the only drawback to the principal borrower, Hague said, is that a co-borrower legally becomes a part owner of the home in most cases. Consequently, the owner cannot sell without the cosigner's consent.

"Normally, people like to own their homes themselves, so as soon as they can they get out of it," or they often try to, Hague said. Generally, the lender must agree to release the cosigner from liability and, in the case of co-ownership, the cosigner must sign a deed transferring ownership.

The downside for the friend or relative who goes out on a limb for the principal borrower is of greater consequence, considering that the only reward is the owner's gratitude.

For one thing, the cosigner's credit becomes encumbered for the mortgage amount.

Moreover, the cosigner is obligated to make up the borrower's missed payments. In the event of a default, the failure goes down as a blemish on the cosigner's credit record. The cosigner also becomes liable for any money owed the lender after the foreclosure sale.

Sometimes cosigners balk at the idea of putting their name on the deed conveying title to the land because that information becomes part of the public record. In those instances, Eisen suggests using a lender that requires a co-signature only for the mortgage note, a private document.

Such lenders, however, are tougher to find. Citibank, for example, "frowns" on such arrangements because the lender has to pursue separate legal actions against the main borrower and the cosigner when seeking restitution, said Thomas Gaspard, head of Citibank's Washington operations.

Increasingly, lenders are putting restrictions on how much of a shortfall it will allow on the main borrowers' financial capability before ruling out cosigners.

The Federal National Mortgage Association (Fannie Mae) plans to introduce a change by July 1 limiting how far it will bend its rules to accommodate borderline borrowers, said Robert J. Engelstad, a company vice president. As a prime source of mortgage money for lenders, the company influences the rules under which many mortgages are written.

Fannie Mae plans to take its lead, Engelstad said, from some of the mortgage insurance companies with stricter policies in place. General Electric Mortgage Insurance Co., for instance, will only permit a cosigner as long as the principal borrower does not exceed the standard housing indebtedness rule by 5 percent.

Until this spring, the Federal Housing Administration placed virtually no requirements on how much of the loan burden the main borrower had to carry, Hershman said.

But a recent FHA rule change, he said, puts an end to one type of co-borrower situation, the "kiddie condo," or a home purchased near a college campus in the name of the student occupying it but paid for by the parent.

The degree of the parent's contribution in a kiddie condo situation is now considered great enough to push the deal into the investor category, which requires a larger down payment of about 25 percent, he said.

The Department of Veterans Affairs does not permit use of cosigners at all.

Cosigners are sometimes confused with shared-equity participants, because both enable buyers to purchase homes otherwise beyond their reach.

In a shared-equity deal, the outside partner contributes to the down payment, the monthly payments or both. In return, the investors generally are entitled to part of the appreciation in the property and can depreciate their share of the property.

Consequently, a cosigner arrangement must pass a "smell test" to determine that the co-borrower is receiving nothing in return.

Many lenders do not care whether the cosigner is related to the buyers, provided the occupant borrowers have at least a 10 percent down payment.

Other lenders, however, look for a close family tie. The Mortgage Guaranty Insurance Corp., for example, will only insure mortgages if the cosigner is a member of the immediate family, which it defines as a parent, stepparent, legal guardian, grandparent, child, brother or sister.