Home Buying With One Spouse on the Mortgage: Pros and Cons

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

No, it is not necessary for both spouses to apply for a mortgage together when buying a house or refinancing their current home.

In fact, in some situations, having both spouses on the mortgage application can lead to mortgage-related issues. For example, if one spouse has a low credit score, it may be difficult to qualify for the loan or result in higher interest rates. In such cases, it may be beneficial to exclude one spouse from the mortgage application.

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.

In this article (Skip to…)

• Benefits of a single applicant
• Drawbacks of a single applicant
• Spouse with good income but bad credit
• Refinancing without your spouse
• One spouse on mortgage, both on title
• Both spouses on mortgage, only one on title
• Community property states
• FAQ

Benefits of having only one spouse on the mortgage

There a several reasons a married couple might want to purchase a home in one spouse’s name only:

1. Avoiding credit score issues
2. Saving money on interest rates
3. Protect the home buyer’s interests
4. Simplified estate planning
5. Mitigate risks during a divorce

1. Avoid credit issues on your mortgage application

When applying for a mortgage together, it’s important to consider potential credit problems that may arise if one person has poor or damaged credit.

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

Unfortunately, lenders do not average out the representative scores for joint applications. Instead, they disregard the higher credit score and base their offer on the lower one.

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

Most mortgage companies will reject applications with credit scores below 580. If one spouse has a score below this threshold, it may be worth considering an individual application.

2. 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, 10% could have paid at least 0.125% less by having the more qualified family member apply alone.

In addition, another 25% 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 home buyer 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 and the larger income.

3. Protecting assets if one spouse has debt issues

Your home can be at risk of being liened or seized in certain situations, especially if your spouse has unpaid student loans, taxes, child support, or outstanding judgments. In such cases, it’s important to take steps to preserve your assets.

One strategy is to purchase the house solely in your name. This helps safeguard ownership from potential creditors. However, it’s important to note that this protection may not apply if your spouse accumulated the debt after getting married.

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.

4. 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 so when you don’t have to untangle the rights of your current spouse to do it.

5. 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 home purchase, you might want to maintain ownership of the home by buying in your name only.

Drawbacks of having only one spouse on the mortgage

There are a couple of reasons it may be best to have both spouses name on a new mortgage application:

1. Decreased home buying budget with only one income
2. Debt-to-income ratio can increase with only one income

If both spouses have comparable credit and shared estate planning, it often makes sense to use a joint mortgage application. That’s because leaving a creditworthy spouse off the mortgage can sharply decrease your borrowing power.

1. Less income means less buying power

One major disadvantage of a married couple buying a house under only one name is that their combined income cannot be considered for the application. This limitation can significantly affect the borrowing capacity.

Put simply, a higher income allows for a larger monthly mortgage payment, resulting in a higher maximum loan amount.

Consequently, couples applying for a mortgage jointly often have the ability to afford larger and more expensive homes compared to individual applicants.

2. Potentially higher debt-to-income ratio

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 leftover in your household budget for a mortgage payment.

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

If one spouse is doing it alone on the mortgage application and they have high debts, they could have a harder time meeting a mortgage company’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. Doing so could ease the other spouse’s debt-to-income ratio.

What if one spouse has high income but bad credit?

What if one spouse had great credit but can’t afford the home on their income alone — and the other spouse has good income but poor credit?

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% minimum 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.

Can one spouse refinance a mortgage without the other?

If only one spouse is on the existing mortgage — for instance, if they bought the home before getting married — that homeowner is free to refinance the mortgage in their name only.

If both spouses are on the current mortgage, your options depend on your refinance goals.

When both spouses wish to stay on a joint mortgage, they must each apply for the new home loan, go through underwriting, and sign the mortgage documents. Refinancing with only one borrower on the application while keeping both names on the mortgage is not possible.

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 homeowner 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. Additionally, the person on the loan will be responsible for paying the closing costs.

Can one spouse be on the mortgage but both on the title?

If the main reason for purchasing a house in your own name is to have a cheaper mortgage, or to qualify for a mortgage, you can always add your significant other to the home’s title after the loan is finalized. This would officially make you “co-owners” of the home.

Just note, the person on the mortgage loan is solely responsible for repayment.

The co-owner’s name listed on the title does not give them any legal responsibility to help with mortgage payments. And in the event of a foreclosure, only the spouse whose name is on the loan will have their credit damaged.

Keep in mind that if you ever refinance or sell the home, you will need consent from the co-owner.

Can both spouses be on the mortgage but only one on the title?

In certain cases, it may be desirable to have only one spouse’s name on a mortgage for estate planning purposes, even though both spouses are paying the loan. However, this is generally not advisable as it may leave the partner not on the title unprotected.

For instance, if you needed the property in just your name for estate-planning purposes, but could not qualify for a mortgage on your own, your spouse might co-sign on the mortgage for you. Alternatively, you could both be co-borrowers, since only one of you needs to be on title legally.

However, many lenders prefer that all borrowers also take title. That’s because technically, a borrower not on title is not a borrower — just a guarantor.

While guarantors are responsible for loan balances if the primary borrower defaults, they are not legally responsible for monthly payments, making the process more complicated and time-consuming for lenders if the borrower defaults.

Mortgage rules in community property states

Taking title as your “sole and separate property” means that you both still get to live in the house — however, only you have an ownership interest. Only your name is on the deed.

But this arrangement is not always 100% straightforward.

You will probably have to “quitclaim”

In community property states, just taking title as sole and separate is not enough. While it indicates your intent to claim ownership, it doesn’t address your spouse’s wishes.

In community property states, it’s assumed that anything acquired by either spouse during the marriage is the property of both. That includes real estate.

To establish clear ownership, a quitclaim deed is necessary. It involves your spouse signing the deed, which is then recorded with your county. The quitclaim deed identifies the grantor (the spouse relinquishing rights to the property) and the grantee (the remaining spouse on title).

Community property states are as follows:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

In other states, you may also have to quitclaim, so you can’t secretly buy real estate without your spouse’s knowledge. And many lenders also require it for the same reason.

Government-backed loans in community property states

One advantage of having the mortgage and homeownership in your name only doesn’t apply in community property states. If you get a government-backed home loan like an FHA loan, VA loan, or a USDA loan, your spouse’s separate debts still count in your debt-to-income ratios.

For government-backed mortgages, the lender may pull the non-borrower’s credit report to verify their debts. However, that person’s credit score doesn’t count toward the application.

HUD guidelines state:

“The Lender must not consider the credit history of a non-borrowing spouse. The non-borrowing spouse’s credit history is not considered a reason to deny a mortgage application.

The lender must

• Verify and document the debt of the non-borrowing spouse
• Make a note in the file referencing the specific state law that justifies the exclusion of any debt from consideration
• Obtain a credit report for the non-borrowing spouse in order to determine the debts that must be included in the liabilities”

Fortunately, other loan programs don’t necessarily carry this requirement.

Home buying with one spouse on the mortgage FAQ

Remember that while these answers provide a general understanding, it is essential to consult with legal, financial, and tax professionals to obtain specific advice based on individual circumstances and local jurisdiction.

What are today’s mortgage rates?

Today’s mortgage rates are still close to historic averages for both home purchases and refinancing.

You may be able to reduce what you pay by only putting the most qualified applicant on the mortgage.

Check all your options to see what makes the most sense for your new home loan.