Home Purchase Without Spouse On Mortgage Note
This BLOG On Home Purchase Without Spouse On Mortgage Note Was UPDATED On August 4th, 2019
Many home buyers automatically assume that if someone is married then both people need to be on the mortgage loan. This is not true.
- If borrower and spouse are home buyers, both can be on the title on the new home purchase
- A Home Buyer can do Home Purchase Without Spouse On Mortgage Note
- Both home buyer and spouse do not have to be on the mortgage note
- Many times, it is best not to put spouse on the mortgage note
- Home Purchase Without Spouse On Mortgage Note may be the only way to get a mortgage loan in many instances
- There are situations, adding spouse on the mortgage note can often be a deal killer
- We will be discussing this reasoning in later paragraphs
- In many cases, not adding the spouse may be the best way to getting a mortgage loan approved
- There are situations where buyer need spouse on the mortgage loan
- Cases, where need to add spouse on the mortgage note, is when the buyer needs a spouse’s income to qualify and meet the necessary debt to income ratio requirements
- If married and are planning on buying a new home, here are the reasons why a buyer may need to add or delete spouse off the mortgage note
Reasons For Home Purchase Without Spouse On Mortgage Note
There are multiple reasons why home buyers would not want to add spouse on the mortgage note.
- Home purchase without spouse on mortgage note is sometimes a necessity and not an option
- One of the main reasons why many borrowers do not add their spouse on the mortgage note is due to low credit scores
Borrowers Credit Scores
Mortgage lenders only take the lower of the two borrowers middle credit scores to qualify for the mortgage loan.
- If the middle credit score of Mr. Smith is 640 and the middle credit score of Mrs. Smith is 550, the 550 credit score will be used for mortgage qualification purposes
- Unfortunately, if the Smith’s are going for a 3.5% down payment FHA loan, then with a 550 credit score will not qualify them
- To qualify for a 3.5% down payment home purchase FHA Loan, the minimum credit score required is 580
Since Mrs. Smith has the lower of the two credit scores, the 550 scores will not qualify the Smith’s for an FHA loan:
Having Just One Spouse On Mortgage Note
In this case, we need to just use Mr. Smith to qualify for the mortgage:
- Mrs. Smith can be on the title to the home
- If Mr. Smith can qualify for a mortgage loan by himself with the income that he is making, then not adding Mrs. Smith on the mortgage note will be the best strategy to take on this particular case
- If Mrs. Smith’s income is necessary to qualify for the mortgage loan, then Mrs. Smith needs to spike up her credit scores in order for her to qualify for the mortgage
- Another option on this case scenario is to have a non-occupant co-borrower
If additional income is necessary to qualify for the mortgage loan and still have Mrs. Smith off the mortgage loan application.
Spouse With No Qualified Income
Cases where the spouse has no income, that spouse does not be added on the mortgage loan.
- Even if the non-working spouse has a higher credit score, that higher score will not be an added benefit
- This is because mortgage lenders go with the lower of the two credit scores
- Even if the spouse is not added on the mortgage note, they can be added on the title to the home and share ownership of the new home purchase
Assets On Home Purchase Without Spouse On Mortgage Note
The joint bank account will not be affected by not adding a spouse on the mortgage loan.
- Need a letter from a spouse that is dated and signed authorizing that borrower has 100% full access to the joint bank account
Home Purchase Without Spouse On Mortgage Note Due To High Debt And No Income
If a spouse has a lot of debt and very little or no income, there is no need to not add spouse on the mortgage note. This is because the spouse’s debt will hinder borrowers income and affect debt to income ratios.
- This is often the case where many mortgage loan originators use as a strategy unless the property is located on a community property state
- Community property states require that even though the spouse is not on the mortgage note, the debts of the spouse must be calculated in calculating debt to income ratios
- Community property states are the following:
- New Mexico
If Spouse Had Prior Bankruptcy And/Or Foreclosure
There are mandatory waiting periods after bankruptcy and foreclosure to qualify for a residential mortgage loan for all types of loan programs. If you did not have a bankruptcy but wife did and spouse did not pass the mandatory waiting period after bankruptcy or foreclosure, you need to not have a wife on the mortgage loan. You can qualify if you did not file bankruptcy but not your wife. Both of you and spouse can be on the title of the home. Same with foreclosure. If you did not have a foreclosure under your name but spouse did have a foreclosure, the spouse will not qualify if the spouse did not pass the mandatory waiting period after a foreclosure.