Can I Buy A House Without My Spouse? Your Mortgage Questions Answered
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Getting married is a blissful time for many, but tying the knot also comes with a lot of financial implications. It can:
- Raise your taxes
- Lower your taxes (if you’re lucky)
- Affect the types of retirement accounts you can get
- Affect how much you pay for insurance
And, in some cases, getting married 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.
Let’s take a look at getting a mortgage without your spouse, why you should consider it and if it’s a good financial idea.
Can A Married Person Get A Mortgage Without Their Spouse?
The short answer is “yes,” it is possible for a married couple to apply for a mortgage under only one of their names. If you’re planning to get a mortgage without your spouse, or if you’re just wondering why someone would do this, we’ve got a few answers.
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.
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Why Would A Married Couple Buy A House Under Only One Name?
There are a couple of reasons why you might leave your spouse off the mortgage. Let’s take a look at those.
One Spouse Has A Low Credit Score
Unfortunately, mortgage companies won’t simply use the highest credit score between the two of you, or historically even the average of your scores; they’ve paid the most attention to the lowest middle credit score. However, recent changes now allow the use of the average of the middle score of all clients on the loan to determine if minimum FICO® requirements are met. This is good news if or your spouse has a middle credit score that would prevent you from getting the best possible rates. Regardless, 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
Many lenders use the 2/2/2 rule. That means you’ll need 2 years of W-2s, 2 years of tax returns, and 2 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 2 years of W-2s – then it might make sense to leave this spouse off the mortgage. If your spouse is self-employed, they will usually need 2 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 they have only been in business for a year – then it may make sense to leave this spouse off the loan.
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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? Unfortunately, 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 larger home loan. However, if your spouse isn’t on the loan with you, your lender can’t consider your spouse’s income when determining how much you’ll qualify for. Therefore, you’ll probably have to settle for a smaller, less expensive home.
The exception to this would be loans that consider the income of household members for qualification, whether or not they’re on the loan. An example of this is USDA loans, where your household income must fall below a certain level.
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? Fortunately, this doesn’t impact underwriting.
You’re both legally allowed to access the funds if it’s a joint account and your name is present.
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 is a community property state? In a community property state, all assets and all debt belong to both spouses. There are currently nine community property states in the U.S.:
- New Mexico
If you live in one of these states and you’re getting an FHA or VA loan, your mortgage company will look at the debts of both spouses. If you don’t live in a community property state, then you live in a common-law state, and have more flexibility with your property ownership and debt.
Applying For A Mortgage Without Your Spouse FAQs
As you can see, there’s a lot to think about when buying property without your spouse, and you may still have questions about some things. The answers to a few of the most common questions surrounding this topic are below.
Can I buy a house without my spouse?
As mentioned above, you can apply for a mortgage and purchase a home without your spouse. There can be many benefits to this option, including securing a better interest rate.
Can I keep my spouse’s name off the title?
If you live in a common-law state, then you have the freedom to leave your spouse’s name off of the house’s title. The title is different from the mortgage in that the name on the mortgage shows who is responsible for paying back the loan. The name on the title dictates who owns the property. Some might consider leaving their spouse’s name off the house title in order to keep their finances separate, to personally manage their life estate, or to protect their home from lenders if their spouse has a poor credit history.
Can you have only one spouse on the mortgage but both on the title?
Yes, having both names on the house’s title won’t affect your mortgage or who is responsible for paying it. Whoever’s name is on the mortgage will be solely responsible for the loan.
Can I add my spouse’s name to the title at a later time?
If you leave your spouse’s name off the title but want to add it at a later point, you can do so using a quitclaim deed. A quitclaim deed is used to transfer property between individuals, and is typically used to pass ownership to family members, add a spouse to the title or even remove them from it after a divorce.
The Bottom Line
Leaving your spouse’s name off of your mortgage or title is not a reflection of the quality of your marriage, and in many cases it can be the best choice for both of you to get the house you both want. It could also ensure that you get the best home loan terms.
Even if you’re not sure if both you and your spouse will be on the mortgage, get started today by talking to a Home Loan Expert to help you make the best financial decision.
Take the first step toward buying a house.