Do you have to apply for a mortgage with your spouse?

Married couples buying a house — or refinancing their current home — do not have to include both spouses on the mortgage.

In fact, sometimes having both spouses on a home loan application causes mortgage problems. For example, one spouse’s low credit score could make it harder to qualify or raise your interest rate. 

In those cases, it’s better to leave one spouse off the home loan.

Luckily, there are a wide range of mortgage programs including low- and no-down payment loans that make it easier for single applicants to buy a home. And today’s low rates make buying more affordable.

In this article (Skip to…)

• Benefits of having one spouse on the mortgage
• One spouse on the mortgage: Drawbacks
• What if one spouse has good income but bad credit?
• Refinancing without your spouse
• One spouse on the mortgage but both on the title
• Both spouses on mortgage but only one on title
• Mortgage rules in community property states

That’s because mortgage lenders pull a “merged” credit report with history and scores for each applicant, and they use the  of two scores or the  of three scores to evaluate applications. The score they use is called the “representative” credit score.

Unfortunately with two applicants, lenders don’t average out the representative scores. They discard the better applicant’s FICO score completely and make an offer based on the lower one.

This could easily result is a higher interest rate. Or, if your spouse’s credit score is low enough, you might have trouble qualifying for a loan at all.

Credit scores below 580 will get denied by most lenders. If one spouse has a score that low, the other should think about going it alone.

Save money on mortgage interest

If one spouse has passable credit but the other has exceptional credit, the higher-credit spouse might consider applying on their own to secure a lower mortgage rate.

This could save you thousands on your home loan in the long term.

A few years ago, the Federal Reserve studied mortgage costs and found something startling. Of over 600,000 loans studied, ten percent could have paid at least 0.125% less by having the more qualified buyer apply alone.

In addition, another 25 percent of borrowers could have “significantly reduced” their loan costs this way.

It may pay to check with your loan officer. For instance, if one borrower has a 699 FICO and the other has a 700 FICO, they’d save $500 in loan fees for every $100,000 borrowed due to Fannie Mae fees for sub-700 scores.

The main drawback to this strategy is that the sole borrower must now qualify without the help of their spouse’s income. So for this to work, the spouse on the mortgage will likely need a higher credit score the larger income.

Preserve assets if one spouse is debt-challenged

Your home is an asset which can be liened or confiscated in some cases. For instance, if your spouse has defaulted student loans, unpaid taxes or child support, or unpaid judgments, he or she might be vulnerable to asset confiscation.

By buying a house in your name only, you protect it from creditors. Note that if your spouse incurred the debt after marrying you, this protection may not apply.

This also applies if you’re buying the place with money you had before marrying. If you purchase the house with your own sole-and-separate funds, you probably want to keep it a sole-and-separate house.

Simplify estate planning

Having the home in your name simplifies estate planning, especially if this is your second marriage. For instance, if you want to leave your house to your children from a previous union, it’s easier to do when you don’t have to untangle the rights of your current spouse to do it.

Head off divorce battles

Of course, you don’t plan on divorcing when you marry. But if the state of your union is a little shaky, and you’re the one doing the heavy lifting on the purchase, you might want to maintain control by buying in your name only.

Leaving a spouse off the mortgage can also affect your debt-to-income ratio (DTI).

DTI is a key number lenders use to determine how much house you can afford. By comparing your gross monthly income to your monthly debts — including student loans, auto loans, and credit card payments — lenders can determine how much money is ‘left over’ in your budget for a mortgage payment.

The higher your income, and the lower your debts, the more house you can afford.

If one spouse is going it alone on the mortgage application and they have high debts, they could have a harder time meeting a lender’s DTI requirements. Or they may qualify, but for a smaller loan amount than expected. 

Then again, if one spouse has a lot of debt and does not earn the bulk of the income, it might make more sense to leave them off the application as it could ease up on the other spouse’s debt-to-income ratio.

In this case, a good solution could be the HomeReady loan from Fannie Mae.

This mortgage program allows you to count extra household income toward your mortgage, without adding the other person as a full co-borrower on the application.

That means the spouse with good credit could apply for the home loan on their own and supplement their income with a portion of their partner’s income to boost their borrowing power. Since the low-credit spouse is not on the application, their poor credit score would not affect the loan eligibility or interest rate. 

The HomeReady loan requires a minimum FICO score of 620 and a 3% down payment.

In addition, the couple must prove they’ve been living together for at least 12 months prior to the application in order for the non-applicant’s income to be counted toward the mortgage.

Other times, a couple or divorced couple might want to refinance to remove one person’s name from the mortgage. This is possible, but the borrower being removed needs to agree to the arrangement.

It is not possible for one spouse to refinance a joint mortgage without the other borrower’s knowledge or consent — that would be mortgage fraud.

In addition, the spouse remaining on the mortgage needs to be able to qualify for the loan on their own. That includes meeting credit score, employment, income, and DTI requirements. And the person on the loan will have to pay closing costs, as well.

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