Buying a House Without Your Spouse: Your Mortgage Questions Answered - Quicken Loans Zing BlogTying the knot comes with a lot of financial implications. It can raise your taxes. It can lower them (if you’re lucky). It can affect the types of retirement accounts you can get. It can affect how much you pay for insurance. And, in some cases, it can even affect your mortgage.

There are a lot of things to consider when you’re getting ready to buy a house. But if you’re married, one that you might not have thought about is whether you and your spouse should both be on the home loan. In some cases, having only one spouse on the mortgage might be the best option.

If you’re looking to get a mortgage without your spouse, or if you’re just wondering why in the world someone would do this, I’ve got a few answers. I spoke with Lindsay Villasenor, a Quicken Loans operations director, to get some insight on what happens when only one spouse is on a mortgage. If you’re married and you’re taking the plunge into the real estate market, here’s what you should know about buying a house with only one spouse on the loan.

Why Would You Buy a House Without Your Spouse?

There are a couple of reasons why you might leave your spouse off the mortgage. Let’s take a look.

One Spouse Has a Low Credit Score

Unfortunately, mortgage companies won’t simply use the highest credit score between the two of you, or even the average of your scores; they’ll pay the most attention to the lowest credit score. So if your spouse has a credit score that would prevent you from getting the best possible rates, you might consider leaving your spouse off the mortgage – unless you need your spouse’s income to qualify for a decent loan amount.

One Spouse’s Income Doesn’t Meet the Requirements

According to Lindsay, “2/2/2 is a general rule for all documentation requirements.” This simply means that you’ll need two years of W2s, two years of tax returns and two months of bank statements. Depending on your situation, more documentation may be required. Conversely, less documentation may be required depending on the type of loan you’re getting, but you should be prepared with these documents just in case.

Now if one spouse doesn’t meet these requirements – say this spouse doesn’t have two years of W2s – then it might make sense to leave this spouse off the mortgage. If your spouse is self-employed, he or she will usually need two years of business returns (although this may vary depending on the loan type and the structure of the business). If your spouse is unable to provide this documentation, for instance if he or she has only been in business for a year, then it may make sense to leave this spouse off the loan.

Things to Know About Leaving Your Spouse Off the Mortgage

If you’re the only one on the mortgage, the underwriter will only look at your stuff, right? It’s not always that simple. Here are a few things to know if you’re getting a mortgage without your spouse.

You Will Probably Qualify for a Smaller Loan Amount

If you’re part of a two-income household, getting a mortgage with both spouses usually means you’ll qualify for a bigger home loan. However, if your spouse isn’t on the loan with you, your lender won’t consider your spouse’s income.  Therefore, you’ll probably have to settle for a smaller, less expensive home.

The exception to this would be loans that take into account the income of household members whether or not they’re on the loan. An example of this would be rural development loans from the USDA where your income has to fall below a certain level. Quicken Loans doesn’t do USDA loans.

Joint Bank Accounts Are Just Fine

So what if you’re only using one income to qualify, but you have a joint bank account with your spouse? According to Lindsay, this doesn’t really impact underwriting.

“As long as our client is on the account and it’s a joint account, it’s determined that they are both legally allowed to access all of the funds,” says Lindsay. As long as you’re on the account, it’s your money and it won’t pose any problems for your home loan.

Your Mortgage Company May Look at Your Spouse’s Debt

When your mortgage company approves you for a loan, they look at your debt-to-income (DTI) ratio, which is the percentage of your gross income that goes toward debt. Your DTI can have a huge impact on your home loan.

If one spouse has a lot of debt, you might consider leaving them off the mortgage to decrease your DTI ratio. However, if the home is in a community property state and you’re getting a FHA or VA loan, both spouses’ debts will be taken into consideration.

So what’s a community property state? In a community property state, all assets and all debt belong to both spouses. Says Lindsay, “The phrase, ‘What’s yours is mine and what’s mine is yours’ is actual law in these states.” There are currently nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. If you live in one of these states and you’re getting a FHA or VA loan, your mortgage company will look at the debts of both spouses.

Well, there you have it. Are you and your spouse considering a one-spouse mortgage? Speak with a home loan expert or leave your questions in the comments section below!

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  1. My husband and I are going through a separation for an indefinitely; he keeps saying he is going to purchase his own house, do you know if anything should happen to him and his ability to make mortgage payments, how or will that affect me? I don’t want to be associated with the house/debt/mortgage; just wondering if I need to take legal action prior to him buying this house.

    Thanks

    1. Hi Meghan:

      If you live in a community property state, it has the potential to affect you because you’re still married. Depending on the type of loan he gets and the way they originate the loan, you could be responsible for his debt. This is generally true of government loans backed by the FHA, USDA and the VA, but it doesn’t apply to conventional loans from Fannie Mae or Freddie Mac. There may be circumstances where he can sign something saying you’re not responsible for the debts if he gets an FHA loan, for example, but that’s the one thing I would worry about. In a non-community property state, he can get a loan without you being responsible for the debt. Hope this helps!

  2. My spouse moved from California to Michigan for new job and I live and work in California (I travel to Michigan on some weekends). Now spouse planning to buy a house in Michigan (we dont own any other property anywhere) and planning to get mortgage loan without my name on loan. What could be the tax implications in California or Michigan if we file taxes jointly? Is it recommended to file separately in this case? Can my name be added as owner even if my name is not on mortgage?

    1. Hi Jack:

      I can tell you for sure that you can be added as an owner on the title without being on the mortgage. That’s doable.

      As far as taxes are concerned, that gets into nuances of both national and state tax law. We’re not in the tax or financial advisory business. I would recommend you speak to a tax adviser about the implications and the best way to file because everyone’s situation is unique.

  3. Hey there. My brother is buying out my half of an inherited house that is still in trust. His lender wants me to sign a “gift of equity letter”. Is this a necessary form for a lender to have when that “gift” isn’t a gift but an inheritance? I would think just having a copy of the trust naming brother as beneficiary of half would be enough in lieu of a down payment and wonder if this would trigger any gift taxes the trust would owe (which seems unnecessary since it is inheritance).

    1. Hi Gina:

      Traditionally, a gift of equity occurs when someone (usually required to be a family member) sells you a property for below the sale price. It does seem interesting that your lender wants to consider selling your inheritance to your brother as a gift of equity, but I would just confirm with your lender that this is the best option for your situation. If you’re still feeling uncomfortable with signing a gift of equity, you might also want to reach out to an attorney, since this is dealing with an inheritance. I hope this helps.

  4. I bought a house in GA before getting married to my fiance and I am the only one with my name on it. If she were to buy a house in her name, would it count as a first home, second home, or investment property? would she be OK to qualify
    my fiance Income $38k No debt.
    my Income $42k Debt mortgage $145k monthly Pay $800
    No car Payment only Insurance $80
    No Credit Cards debt

    1. Hi Alex:

      When it comes to property classification, the key factor is whether or not she’ll be spending the majority of her time there. If you spend the majority of the year there, it’s a primary residence. If not, it’s considered either a second home or an investment property depending on whether you have renters the majority of the year.

      As far as qualification, it helps that she has no debt if she wants to qualify on her own with strictly her income. If you both want to be on the mortgage in order to potentially afford more house, your debt is minimal, which is also good. That said, I’m not licensed, so I can’t say for sure what your chances for approval or the terms would be for sure. I’m going to recommend you speak with one of our Home Loan Experts by calling (888) 980-6716. Thanks for reaching out!

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