Home Loan Without Spouse On The Loan

Qualifying For Home Loan Without Spouse:

There are many reasons why home buyers want or need a home loan without spouse on the mortgage note. You can have home loan without spouse on the mortgage note and have the spouse on the deed as joint owners to the property. Some married folks have a relationship of what is mine is mine and what is your is yours so some may not want the spouse to have any ownership to the home they are buying, which this can be done as well. On many cases, having a home loan without spouse may be the only option in getting a home mortgage due to debt or credit issues.

Reasons Why Buyers Would Get Home Loan Without Spouse

Just because you are not on the home loan does not mean you cannot have ownership to the home. On cases where one spouse is a homemaker and has no income, there is no reason why the non-working spouse should be on the home loan. The spouse can be on title to the property and on community property states , the non-borrowing spouse has mandatory 50% ownership to the home purchase regardless whether or not they are on the mortgage note. Another reason why a home buyer would need a home loan without spouse is due to the spouse having a low credit score and not meet the mandatory minimum credit score requirements to qualify for a mortgage loan. Mortgage lenders will always use the middle credit scores of between the two mortgage loan borrower. For example if the main borrower’s middle credit scores are 590 FICO and the co-borrowers middle credit score is 550 FICO, the lower of the two, 550 FICO, will be used to qualify for the home loan. Unfortunately, the minimum credit score requirement for a 3.5% down payment FHA home purchase mortgage loan is 580 FICO. So by having the co-borrower with a 550 FICO credit score on the mortgage loan, this couple will not qualify so the only way to qualify for home loan on this case scenario is to leave the co-borrower spouse off the home loan. Leaving your low credit score spouse off the loan also means you cannot use the spouse’s income to qualify for the home loan.

Home Loan Without Spouse Due To No Income Or High Debt

Mortgage loan borrowers who has a spouse who does not have qualified income and cannot use any of their income do not have to add the spouse on the mortgage loan. By not adding the spouse on the home loan does not mean the spouse does not have ownership to the property. You can be on title and not on the mortgage note. On another case scenario is when a spouse has high debt where adding the spouse will hurt and negate the main borrower’s debt to income ratios. For example, the spouse may have part time income but may have two car payments  and large student loan payments on their name where the monthly debt payments will negate the gross income and ultimately hurt the overall income profile of the mortgage loan application. On case scenarios like these is to apply for home loan without spouse. Another typical common case scenario for leaving the spouse off the mortgage loan is when the spouse is self employed and does not have positive income and just has large losses on their income tax returns. This will hurt the borrower and the best option on cases like these is to leave the spouse off the home loan.

Home Loan In Community Property States

Home Loans in community property states are different than non community property states. In community property states, all assets and debts that incurred after the marriage belongs to both spouses, whether it is in writing or not. When applying for home loan in community property states, the mortgage lender will look at both spouses debt even though one of the spouse is a non-borrower and not on the mortgage note. The philosophy in community property states is What is yours is mine and what is mine is yours.  Home loans in community property states does not require the non-borrower’s income or credit scores but do count the borrower’s debt. The debt prior to marriage is not counted unless those debts are added on after marriage. There are nine community property states in the United States and these states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If home buyers live in these nine states and they are applying for government loans such as FHA Loans, USDA Loans, or VA Loans, then the mortgage lender will look at the debts of both spouses. They will not look at the credit scores of the non-borrowing spouse but will only look at the monthly debt obligations.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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