If you are a married couple buying a house under one name, there are some pros and cons you should consider. You can buy a house without your partner. In fact, in some cases, there are advantages to buying your home that way.
- You can buy a house without a spouse, but you should consider income, credit, and assets.
- There are advantages and disadvantages to getting a mortgage without your spouse
If you are married, you do not have to buy a house together, and on the other hand, there are no restrictions against buying a home together if you are not married. What sellers and lenders care about is if you can pay the mortgage. If you buy the house, do you have enough income and assets to close the deal? Also, the bank wants to know if you have a bad credit score that shows you are a risk to default on your loan.
Buying a House Without a Spouse
If you are married, one spouse can buy a house without the other. In fact, SFGate says that sometimes it makes more sense for only one spouse to apply for a mortgage. The wife may have damaged credit, or the husband may be unemployed. These are the main two reasons a couple will buy a house under one name. However, there are advantages to joint loans.
- Greater borrowing power
- Shared responsibility for loan repayment
- Title and deeds will not be joint
You should carefully consider the advantages and disadvantages of buying a house under only one partner’s name. Remember that the biggest consideration is that only the husband or wife who takes out the loan will be on the deed and title.
One Spouse has Bad Credit
A married couple is more likely to benefit from buying a house separately when one spouse has bad credit. Adverse payment history appearing on one person’s consumer report could sink your home loan application or significantly increase interest rates and monthly payments.
One spouse having bad credit is the main reason not to buy a house together. It can be much easier to qualify using the consumer report and FICO score of the person with better borrowing credentials.
However, weigh any credit problems against your spouse’s income, assets, and debt. These other factors are also important.
One Spouse has Low-Income
A second reason it might make sense for a married couple to buy a house under one name is when one spouse has little or no income. This situation can crop up for a variety of reasons.
- The wife is a stay-at-home mother
- The husband may be unemployed
- A small business has uneven earnings
- A self-employed individual cannot document income
Home loan companies consider the Debt-to-Income (DTI) ratio when evaluating applications across the globe including the UK, Canada, Australia, Florida, Texas, California, Georgia, etc. A low-earning spouse does not help the DTI ratio, but their debts could destroy it.
Both Spouses on House Title
If a married couple is buying a house in only one person’s name, both spouses may be on the title. Banks generally do not care if the husband and wife own the house together, even if only one spouse is on the mortgage. The lender will have the non-borrowing spouse sign documentation that puts their lien ahead of the non-borrowing spouse’s ownership rights.
However, both the husband and wife must be on the deed if you apply for a joint mortgage because the lender will require whoever is borrowing money to be on the title and deed.
Can a Married Person Get a Mortgage without Their Spouse?
A married person can get a mortgage without their spouse. A husband or wife can qualify for a mortgage without the other. Should you apply for a mortgage without your spouse, though? Quicken Loans points out that it depends on your financial situation whether it is better for you to apply for a mortgage jointly. Here are some guidelines which may help if you both have:
- Significant income
- Similar credit scores
- A savings nest egg
- A small amount of debt
If you have similar credit, you will be able to get a higher loan, because banks will consider your combined income. In most cases, it is better to apply for your mortgage together.5
Can One Spouse Apply for a Mortgage?
One spouse can apply for a mortgage without the other, but four critical underwriting considerations will determine whether the company will approve the application. Those factors include:
- How much is your personal income?
- What is your individual credit score?
- How much debt do you have?
- What assets do you have?
The mortgage application will consider the credit score and income of one spouse separately. However, the issues of debt and assets are more complicated. For both assets and debts, it depends on which spouse owns it, but it also depends on where you live.
Income and Credit Scores
The income and credit scores of both partners dictate whether it makes sense for one spouse to apply for a mortgage rather than two.
Lenders can often easily separate a husband’s income from his wife’s. Most of the time, each has a W-2. There may be some joint income from things like dividends from investments or profits from the sale of stocks and bonds. The bank will consider these joint income situations and weigh them accordingly with other individual income.
Credit scores are even more straightforward. Each spouse has their own. Therefore, the lender will only look at the report for the partner who is applying for the mortgage.
Debt and Assets
The debts and assets of both partners also influence whether it makes sense for a husband to apply for a mortgage without his wife.
Property in the wife’s name or debts in the husband’s name may or may not come under scrutiny when one spouse applies for a mortgage individually. It depends on two things:
- Where do you live?
- Who owns the debt or asset?
If you live in a community property state, then all assets and debts are commonly owned. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you live in one of these states and apply for an FHA or VA loan, the underwriter must look at all the assets and debts for both spouses even if only one applies for the mortgage.
According to the Federal Housing Authority underwriters must consider the non-borrowing spouse’s debts. For conventional loans, the bank may separate the financial instruments by the individual owner, but probably they will not.
What if you live in one of the other 41 states? Then, you live in a common-law state. Assets and liabilities can be under one of both spouses’ names. For instance, the wife has a checking account in her name, alone, then the bank does not consider it if only the husband buys a house.
On the other hand, you may buy a car and take out a loan together to pay for it. In this case, the mortgage company will consider it on the husband’s loan application. Therefore, where you live, how you spend your money, and how you deal with your finances may affect if the bank approves or denies your application.
The non-borrowing spouse does not have to be on your mortgage note. Further, they do not have to be on the title or deed. However, the bank still makes the non-borrowing spouse sign some documentation. This is because the spouse not on the mortgage still has ownership rights to the property, and the bank wants to ensure that it can foreclose if the couple defaults.
In order to understand why the bank does this, we need to examine the components of a mortgage. There are two important documents that make up the loan:
- The mortgage secures the loan using the real estate property as collateral.
- The note obligates the signee to pay the loan.
While this may seem like a subtle distinction it is very important. The bank only requires the borrowing spouse to sign the note, which is the promise to pay. The bank will not go after the other partner for remuneration if the mortgage goes into default.
Why, then, does the bank make both sign the mortgage itself? That is because the mortgage is a lien on the house. It is the document that gives the bank the right to foreclose and take possession of the property.
The husband or wife not on the note still has an ownership right to the property, even though they do not have any responsibility to repay the loan. This may create a conflict over whose ownership rights supersede the other.
Can the bank evict the non-borrowing spouse? To get around this the bank makes both spouses sign the deed. By signing the deed, the non-borrowing partner clearly states that they acknowledge the bank has the right to foreclose if their spouse does not pay the loan.7
Without Spouse on Title
While only the borrowing spouse must be on the mortgage note, you can have two names on the title. A house title conveys ownership, while a mortgage is a loan. The two are related, but they are separate. A further consideration is that if you live in a community property state then the non-borrowing spouse has equal ownership even if they are not on the title or mortgage note.
Spouse on Deed
Sometimes, a married couple might need to add the non-borrowing spouse to the deed but not the mortgage. If you do this it will trigger the due on sale clause of your loan. In most cases, the bank waives this requirement for a spouse.
They generally check the partner’s credit and income, though. Then, they have the non-borrowing spouse sign the mortgage to protect their right to foreclose. This happens a lot when a couple gets married, and there may be other reasons, too.
Banks generally do not want to get in the way of a couple rearranging their possessions, but they do want to protect their investment. According to Homeownering.com, if you want to add your spouse to the deed, then you should contact your lender first and make sure you go through the proper steps.
Spouse Closing Disclosure
The non-borrowing spouse does have to sign the mortgage note, but they will have to sign a closing mortgage disclosure statement. This protects the bank’s ability to foreclose, but it also makes it impossible to buy a house without your spouse’s knowledge if you get a loan.
Married couples should be aware that home lenders do not require your spouse to be on the mortgage promissory note, or title (deed) if you apply for the loan by yourself.
- The promissory note commits the applicant to repaying the loan.
- The title or deed shows ownership of the property.
Therefore, one partner can buy a house without the other spouse knowing but only if the spouse pays cash. This is not true if the spouse needs to take out a mortgage to buy the property.
However, your spouse must be on the deed if you apply for a joint mortgage because the mortgage company will require whoever is borrowing money to be on the title and deed.
One Spouse Drawbacks
Married couples should consider the drawbacks to having only one spouse on the mortgage before buying a house alone. SFGate shows that if a husband or wife buys a house in his/her name only they should expect to encounter several disadvantages.
The first disadvantage is that you might have to buy a less expensive property. A mortgage in only one spouse’s name is limited by income. This is important if both husband and wife have good incomes. The spouse being left off must have very bad credit or extremely high debts to offset the loss of purchasing power.
Another downside is that the bank may look at your combined debts anyway. Leaving one spouse off the mortgage may not get around this problem. This is certainly true in community property states, but if you both sign jointly for the car loan, the credit card, or the personal loan then the lender considers it even in a common-law state.
In conclusion, a married couple can buy a house under one name. Most of the time, though, a husband and wife should buy a house together. Even so, circumstances can make buying a house alone advantageous. These advantages include one spouse has poor credit, low/uneven income, or high debts.
Getting a mortgage without your spouse is no more complicated than getting a joint loan. However, you must carefully weigh the advantages and disadvantages to see if this is the right decision for you. Carefully examine your finances, including your assets, debts, credit reports, and income.