Whose credit score is used on a joint mortgage is generally the spouse with the lower scores. Banks look at the reports from all three agencies for both spouses. Lenders use the middle score for the spouse with worse credit.
- You may be able to get a joint mortage if your partner has poor credit, but it depends on how damaged their credit is.
- A joint mortgage is different from joint ownership.
- You can get a mortgage without your spouse.
While most banks only consider the lower score, some do combine the scores. Others only consider the score of the spouse with the highest income. It is in your best interest to shop around and compare lenders.
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Can I Get a Joint Mortgage if My Partner has Bad Credit?
You may be able to get a joint mortgage even if your partner has imperfect credit. You may not though, depending on how bad your partner’s credit is. Even if you can get a loan, you will pay a higher interest rate.
What is a Good Credit Score for a Mortgage?
A good credit score for a mortgage is 740 because at this point banks usually give their best interest rates. Having said that, the higher the better. Here are some milestone numbers to think about:
- 550 – Some lenders, but not all, may offer high interest mortgages
- 620 – Almost all lenders will underwrite a loan
- 740 – Banks offer their best interest rates
As you can see, you do not have to have perfect credit to get a mortgage. In fact, because the house is collateral the bank will give you lower interest rates than you can get for any other type of loan. However, the better your credit, the better the rate.1
What Credit Score is Needed for a Joint Mortgage?
The minimum score you must have is 550. However, not all lenders will underwrite a loan if your score is that low. We highly recommend that you repair your credit and wait until your score rises to at least 620.
Even if you have a 620-credit score, we recommend that you continue to wait and build your score up to at least 740. At the same time, you should save money for your down payment. If you have a 740-credit score and 20% to put down, you are in a much stronger position to buy a house.
Does Joint Mortgage Mean Joint Ownership?
A joint mortgage is different from joint ownership. In many ways, they go together because when you buy a house with your spouse or an investment property you often take out a mortgage at the same time. However, you can be liable for the mortgage debt without owning the house. On the other hand, you can own the home without being on the mortgage.
- Joint mortgage is a loan to secure assets to buy (or renovate) a property
- Joint ownership has to do with the ownership rights of the property
You may be asking, why would anyone put themselves on the hook for a loan for a house they do not own. It is not common, but it does happen. Often, parents cosign for their children if the kids need a little help. We do not recommend doing this, but it does happen.
On the other hand, it is much more common for someone to be an owner, but not a borrower. Often, married couples opt to not include one spouse on the loan, because they have poor credit.2
Are You More Likely to be Accepted for a Joint Mortgage?
Banks more readily accept joint mortgages over single borrowers. This is for a couple of reasons:
- Combined income is greater
- Combined assets are greater
Having said that, your partner may not always benefit you. If they have a lot of debt or imperfect credit, your partner will hurt you instead of helping you.
Do Married Couples Get Better Mortgage Rates?
Married couples do not always get better mortgage rates. In fact, the rate usually (not always) depends on the spouse with the lower score. You often can get better terms if you apply jointly, depending on your situation. Combined income:
- Means you can get a larger loan.
- With little debt makes it easier to get approved.
It can also work against you, though. If one spouse has high debt, low income, or poor credit, then you should think carefully about a joint mortgage.3
Can a Married Person Get a Mortgage Without Their Spouse?
A married person can get a mortgage without their spouse. In many cases, this is optimal for getting the best loan terms.
Applying for a Mortgage Without Spouse
If you apply for a mortgage without your spouse, the process is similar to the application for a joint loan. The bank looks at your income, not your spouse’s. They also consider your combined assets because you cannot separate them from your spouse. Also, they only consider your credit. Finally, they make your spouse sign the title, so the bank’s ownership claim is paramount if they need to foreclose.
Why Does a Non-Borrowing Spouse Have to Sign the Mortgage?
To understand why the non-borrowing spouse must sign the mortgage you must understand the two documents associated with the loan.
- The promissory note commits you to pay back the loan
- The deed of trust states that the lender may foreclose if you fail to pay your mortgage
The mortgage company will not make your spouse sign the promissory note. However, they will make them sign the deed of trust. This is because your spouse has an ownership claim to the property. In fact, in a community property state, he/she will automatically own half of the property. The bank makes both of you sign this document so that your spouse’s ownership claim will not trump their ability to foreclose.
Final Thoughts about the Credit Score for a Joint Mortgage
Banks look at the credit scores of anyone on the mortgage. Most check the scores from each of the three credit bureaus. Then they use the middle of the three scores for the person with the lower credit. Some look at scores for all the borrowers and combine them. Finally, some lenders look at the scores for the person with the highest income.
Whichever strategy they use, it is in your best interest to repair any credit damage and decrease your debt as much as possible before you apply. The bank always carefully considers the lowest credit score because it represents the greatest risk.
