If you’re applying for a home loan, you may assume—as most borrowers do—that both spouses automatically go on the loan.
But what if your spouse isn’t credit-worthy? Will that reduce your chances of getting approved, or worse, lead to a denial?
Can You Get a Home Loan if Your Spouse Has Bad Credit?
Although most states in the western U.S. recognize community property laws, Utah is not one of those states.
This means that, if your spouse has bad credit (orno credit), excessive debts, collections or judgments, you have the option of applying for a home loan individually. For many potential borrowers, this is the only way to get a mortgage approval.
If you choose to apply jointly, you run the risk of being denied based on how your spouse’s unfavorable history may affect your overall creditworthiness.
How Does Each Spouse’s Credit Score Contribute to Mortgage Approval?
In community property states (which include Idaho, Nevada, Arizona and California), both FHA and VA loans requirethe consideration ofboth spouses’ debt. So if your spouse has an abundance of debt, it can skew your debt-to-income ratio and potentially prevent you from getting a home loan approval under those programs.
In Utah, however, you have the option of applying individually or as a married couple, even for VA and FHA home loans.
If you elect to apply jointly for a mortgage, the lender will consider the debts, income and credit history of both applicants and calculate your ratios accordingly. Neither spouse’s data is weighted more heavily than the other.
What Happens If You Apply for a Mortgage Without Your Spouse?
If you are a resident of Utah, you can legally apply for a home loan without your spouse. You can also get a loan approval to purchase a home on your own, even if you are married.
Bear in mind, however, that the underwriter will only be able to consider your income when determining how much you can borrow. If you want your spouse’s income to be considered, their debts and credit history will also come into play.
The outcome may be a lower borrowing limit than you otherwise would have, but you can still buy a home—which you might not otherwise accomplish if your spouse has a negative credit profile.
In most cases, you will be unable to add your spouse to the property’s deed without violating the terms of your loan agreement. Consequently, you must consider the legal implications of applying for a mortgage alone. Talk to an attorney before you make any decisions that could affect your future and that of your husband or wife.
For a personalized answer to your questions, contact Intercap Lending and speak to one of our knowledgeable lending professionals. We help clients in Orem and throughoutnorthern Utah with all their lending needs, including mortgages, refinances, construction loans and more. Contact us today to learn more about the pros and cons of applying for a home loan with your spouse.
FAQs
On a joint mortgage, all borrowers' credit scores matter. Lenders collect credit and financial information including credit history, current debt and income. Lenders determine what's called the "lower middle score" and usually look at each applicant's middle score.
Do lenders look at both spouses' credit scores? ›
However, it'll be more difficult than if you both had perfect credit scores. When lenders look at your application, your partner's credit history will be viewed alongside your own. Most lenders will add your credit scores together, and you'll need to meet their minimum score to be considered.
Can a couple buy a house if one has bad credit? ›
If your spouse has a significant amount of debt as compared with income and they're applying for the mortgage along with you, it might be denied. Even if your joint mortgage application is approved, your loved one's poor credit or high DTI could land you with a higher interest rate than if you'd applied alone.
Can I get an FHA loan if my spouse has bad credit? ›
In community property states (which include Idaho, Nevada, Arizona and California), both FHA and VA loans require the consideration of both spouses' debt. So if your spouse has an abundance of debt, it can skew your debt-to-income ratio and potentially prevent you from getting a home loan approval under those programs.
Does your spouse's credit score affect yours? ›
Credit histories and scores don't combine when you get married. Your credit history and scores are yours and yours alone, and your marital status is not included in your credit reports. But if you have a shared account or you're an authorized user of your spouse's account, you could affect each other's scores.
Will my partner's bad credit affect me getting a mortgage? ›
Lenders are often willing to consider applications to add someone to an existing mortgage however the process is typically trickier if that person has a history of bad credit. Some lenders will still consider your application, however they will want to know: The circ*mstances surrounding the credit issues.
Whose credit score is used when buying a house with a spouse? ›
On a joint mortgage, all borrowers' credit scores matter. Lenders collect credit and financial information including credit history, current debt and income. Lenders determine what's called the "lower middle score" and usually look at each applicant's middle score.
What is the lowest acceptable credit score to buy a house? ›
For a conventional mortgage in California, you typically need a minimum score of at least 600. If you qualify for certain government-backed loans, however, you may be able to buy a home with a score as low as 500.
What income do you need for a 400k mortgage? ›
To afford a $400,000 house, you typically need an annual income between $100,000 to $125,000, which translates to a gross monthly income of approximately $8,333 to $10,417. However, this is a general range, and your specific circ*mstances will determine the exact income required.
Is it better to apply for a mortgage jointly or separately? ›
If you choose to buy a home through a joint mortgage, your combined income may help you secure a larger loan at a better rate. But there are potential downsides as well. Along with combining your income, a joint mortgage also combines your debt. It also looks at both of your credit scores.
The three primary factors that can disqualify you from getting an FHA loan are a high debt-to-income ratio, poor credit, or lack of funds to cover the required down payment, monthly mortgage payments or closing costs.
How can I raise my credit score 100 points in 30 days? ›
Improving your credit in 30 days is possible. Ways to do so include paying off credit card debt, becoming an authorized user, paying your bills on time and disputing inaccurate credit report information.
What if one spouse has high income but bad credit? ›
It takes a minimum credit score of 620 to qualify for a conventional mortgage. If your spouse's credit is so poor that your average credit score is below that threshold, then you may not be able to get a joint mortgage. Applying for a mortgage on your own could be a better bet if your income is high enough to qualify.
Will my bad credit affect my husband buying a house? ›
If your spouse has a bad credit score, it will not affect your credit score. However, when you apply for loans together, like mortgages, lenders will look at both your scores. If one of you has a poor credit score, it counts against you both. You may not qualify for the best interest rates or the loan could be denied.
Does my husband's credit rating affect mine? ›
Your spouse's credit history won't hurt, change or erase your credit score or credit history. So if you have a glowing credit history, you won't automatically be harmed by marrying someone with a poor credit rating.
Is a wife responsible for a husband's credit card debt? ›
You are generally not responsible for your spouse's credit card debt unless you are a co-signer for the card or you're a joint cardholder on the account. However, state laws vary, and divorce or the death of your spouse could also impact your liability for this debt.
How is a married couple's credit score calculated? ›
Married couples don't have a joint FICO Score, they each have individual scores.
Does my partner's credit score affect mine? ›
Marrying someone with poor or damaged credit does not affect your credit scores. But if you and your spouse plan to seek credit jointly, their low credit score could affect your ability to get a loan, or lead to higher interest charges than you'd get if you applied yourself.
Do mortgage companies use both credit scores? ›
Mortgage lenders pull all three credit reports
But they only use one when making their final decision. If all of your scores are the same, the choice is simple.
Do husband and wife have separate credit reports? ›
You and your spouse each have your own separate credit files. Only accounts that are in both your names will show on both of your credit files. This would include any joint accounts you have, as well as accounts for which either of you are a co-signer or an authorized user.
