Ask Our Broker With Peter G. Miller: Solo Married Buyer
Question: My husband and I are interested in buying a first home. We left our last jobs about six months ago and I immediately found new employment. Will lenders consider a mortgage application from us given that my husband has not found a new job?
Answer: It is entirely possible for couples to buy real estate on the basis of one income and sometimes it’s actually desirable. For example, if you have strong credit and your husband has a low credit score, then you might want to consider a mortgage application where you are the sole applicant.
While you can generally apply for a mortgage using just the income and the credit from one spouse there are a few wrinkles.
In your particular situation, the lender will ask if that new job is in the same field where you have been working for a given period, say two years. They will also want to know whether the new position represents a wage increase or not.
How debts are treated will depend on the state where the property is located. In most states the lender will just look at your debts, however in community property states the lender may want to look at all household debts.
If you share assets such as savings accounts and mutual funds the big question from the lender will be whether or not you have full access to the money. If yes, everything should be fine.
After the lender checks into the specifics of your situation as a single borrower who is also married, the lender will then apply the usual tests, which are considered with every mortgage loan. In particular, the lender will want to look at your gross income and your debt-to-income ratio.
Because you are financing with one income your wages alone must be sufficient to support the debt. You will have to show that you have enough income to carry the monthly payments without financial assistance from your husband.
Different loan programs have different levels of allowable monthly costs. Some newer loan programs now allow debt-to-income ratios to reach as much as 50 percent of gross monthly income. The attraction of such programs is that they may allow you to qualify for financing while traditional programs would not, however you’re taking on a lot of debt and that may be very uncomfortable.
If you find that mortgage lenders are not likely to accept an application from you as a single borrower than the alternative is to wait until your spouse finds employment, you have fewer debts or you borrow less.
Peter G. Miller is author of "The Common-Sense Mortgage," (Kindle 2016). Have a question? Please write to peter@ctwfeatures.com.
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