Must both be Catholic? My sister is curious, as she is Catholic, but her husband is Methodist.

You technically only need one godparent, who actually acts as the sponsor to the person being baptized. That one godparent needs to be a fully initiated Catholic in good standing. A second Catholic person can also serve as a godparent or you could have a second person who acts as a “Christian Witness.” This person need not be Catholic but I would recommend they be a baptized and practicing Christian (presumably of more mainline Christians who also use a Trinitarian formula and water for Baptism and a similar understanding of the nature of Jesus and the Trinity; some Evangelical or Pentecostal groups may or may not meet this criteria). Christian witnesses allowed since only one godparent is technically required and that there is “one baptism for the forgiveness of sins.”

Here’s the relevant part of Canon Law:
Can. 872 Insofar as possible, a person to be baptized is to be given a sponsor who assists an adult in Christian initiation or together with the parents presents an infant for baptism. A sponsor also helps the baptized person to lead a Christian life in keeping with baptism and to fulfill faithfully the obligations inherent in it.

Can. 873 There is to be only one male sponsor or one female sponsor or one of each.

Can. 874 §1. To be permitted to take on the function of sponsor a person must:

1/ be designated by the one to be baptized, by the parents or the person who takes their place, or in their absence by the pastor or minister and have the aptitude and intention of fulfilling this function;

2/ have completed the sixteenth year of age, unless the diocesan bishop has established another age, or the pastor or minister has granted an exception for a just cause;

3/ be a Catholic who has been confirmed and has already received the most holy sacrament of the Eucharist and who leads a life of faith in keeping with the function to be taken on;

4/ not be bound by any canonical penalty legitimately imposed or declared;

5/ not be the father or mother of the one to be baptized.

§2. A baptized person who belongs to a non-Catholic ecclesial community is not to participate except together with a Catholic sponsor and then only as a witness of the baptism.

Yes, Godparents must be Catholic.

You can have one godparent, two godparents of opposite sex, or one godparent and one non-Catholic Christian witness to the baptism.

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