How to Apply for a Mortgage with Bad Credit and a Spouse - The Bills.com Blog
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How to Apply for a Mortgage with Bad Credit and a Spouse
Question: Hello - I am married - about a year. We want to buy a condo, but my husband has some questionable credit that will hold us back on a good loan. Mine is good. Can I apply for a loan on my own, for the purpose of buying a house as a married person? I would need to borrow about 250,000 and I am ateacher (15 years). Thanks.
Answer: Thanks for visiting Bills.com and I think I can help with your credit question. The quick answer is: Yes! You do not have to apply with your husband. In fact, Bill and Mrs. Bill just went through something similar where I left Mrs. Bill off of the loan application because her credit score was too low for the loan.
However, keep in mind that if you apply for a mortgage on your own... you solely carry the burden of that mortgage obligation. If you default they will only come after you. Depending on the laws in your state, if you get divorced that liability may or may not follow your spouse.
Also, another loan consideration other than credit score is debt to income ratio. If your spouse makes a positive
income, there is a chance that his income would improve this D-T-I ratio and thus increase your likelihood of obtaining a loan.
Net-net: a good mortgage loan officer should be able to walk you through how to qualify and how to get the best loan for your needs.
You can apply with Bills.com's lender network here:
https://www.bills.com/mortgage/mortgage_quote
Be sure not to add yourself to your spouse's cards, but you can add your spouse to your cards as a joint-borrower, which will help pull their credit up.
Also, you should try to pay off any delinquent cards or accounts as quickly as possible to improve their credit.
Also, it might be important to understand how your credit score
is calculated. Your credit rating is calculated based on several variables, including: your payment history (do you have any late payments, charge-offs, etc.), the amount and type of debt that you owe, if you have maxed out any of your trade lines, and then several other secondary factors like the length of your credit history and how many recent inquiries have been made to look at your credit history. Paying off delinquent or maxed out trade-lines will almost always help your credit score.
If you would like more information, please visit our credit resource page.
I hope the information provided helps you FInd. Learn. Save!
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by Ken on Thursday 11th October 2007 13:36
Is it possible for a homemaker wife, no income, to apply for a home mortgage by herself but use the income from her husband? The reason for this arrangement would be to take advantage of the wife's good credit and exclude the husband's bad credit.
2. Posted by Bradford on Friday 12th October 2007 07:51
That's a good question... but the bad news is that it is very unlikely that this would be successful in the current lending environment. Lenders won't let you match the 'income' from your husband and the 'credit' from you. What they will do is to take both of you as joint applicants... but if he is the wage earner his bad credit will harm you. The way people did this in the past was by literally fabricating their income with stated income loans (where you would say that you make your husband's income... or even more!) They are frequently called 'liar's loans' but they aren't too well embraced in this lending environment for obvious reasons.