FHA Home Loans with a Non-Purchasing Spouse

Learn the rules about buying a home with your spouse

Married first-time home buyers using the FHA mortgage loan program may in some cases wish to leave one spouse off the mortgage, the title or both. What options are available to married borrowers depends partly on FHA rules and partly on state laws.

What is the simplest way to get a home loan for married couples?

While the easiest and simplest method of buying a home for married couples is for both to apply for and sign the mortgage note and for both spouses to be on title as owners, there are some situations where a spouse should not or cannot be on the mortgage or title. There are usually two reasons that only one of two married home buyers go on a mortgage and/or deed instead of both. The first reason is asset protection and the second is credit issues.

Why would you have a Non-purchasing Spouse?

The most common reason that only one spouse goes on a mortgage application is because the non-purchasing spouse has credit issues such as a credit score too low to qualify for the loan. For example, if one spouse has a 650 credit score but the other spouse has a 580 credit score, both borrowers applying together will get rejected for a fha home loan program requiring a minimum 620 credit score because all borrowers must meet the minimum score requirement.

To get around this problem, many married couples have the person with the better credit apply for the loan. The only problem with this strategy arises when you need the income of both borrowers to qualify for the loan. Having only one borrower on the mortgage application only works if that borrower has sufficient income to qualify for the loan on their own.

Non-purchasing spouse required credit check

Even if only one borrower does apply for an FHA home loan, the FHA program requires that the non-purchasing spouse may also have to submit to a credit check even though they will not be a co-signer on the mortgage loan. In this case the non-purchasing spouse's credit score will not be considered so it will not prevent the purchasing spouse from getting approved for an FHA mortgage based on credit score alone.

What does vary from lender to lender with the FHA mortgage program is whether or not the debts of the non-purchasing spouse need to be considered in calculating the purchasing spouse's debt-to-income ratios. In some states with community property laws, lenders are required to add in those debts because in those states each spouse is entitled to half of all community property but also liable for half of all debt. For other states, some lenders will add in that debt because they consider that the debts will have to be paid by the household anyway.

Assuming that the debts from the non-purchasing spouse do not prevent the purchasing spouse from qualifying for an FHA mortgage, the non-purchasing spouse may still be required to sign papers at closing. Usually these papers are required to acknowledge that the spouse has no claim on the property and that the spouse is not a borrower.

FHA Home Loan in divorce situations

Getting those papers signed is no problem unless you are in the middle of a divorce situation. As long as you are legally married and do not have a divorce decree or separation agreement, the non-purchasing spouse's signature is required unless your state has some type of protection for these situations (check with your attorney). Many homeowners who are trying to buy a home but are still married to the spouse they are divorcing may find it difficult to get those signatures if there is an unfriendly divorce situation.

Once the mortgage side is straightened out, you will then have to deal with the issue of title. FHA makes that simple by requiring that whoever is on the mortgage note must also be on the title. The non-purchasing spouse may not be on title as an owner if they are not also on the fha home loan mortgage note. This means that married couples looking at asset protection strategies may be better off with a conventional loan from Fannie Mae or Freddie Mac which permit title to be held by non-borrowers.

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