Does Being Married With a Spouse on the Mortgage Affect FHA Loans?

The spouse of the primary borrower is considered a co-borrower for FHA-insured loan purposes.

The spouse of the primary borrower is considered a co-borrower for FHA-insured loan purposes.

The Federal Housing Administration has helped make home ownership a reality for millions of people since the agency's inception in 1934. The FHA protects lenders by reimbursing their losses if borrowers default. FHA-insured loans must adhere to Department of Housing and Urban Development guidelines. Eligibility requirements tend to be more flexible than those for conventional loans. If you are seeking an FHA-insured loan, the inclusion of your spouse's name on the loan application may help or it may hurt.

The Basics

FHA-insured loans may be acquired for the purchase or refinance of one- to four-unit homes.They are generally designed for use on primary dwellings. A borrower that applies for an FHA loan with a spouse is considered the primary borrower and the spouse is considered a co-borrower. Both are entitled to equal ownership rights and share the loan obligation. The credit of both borrowers is equally impacted in the event of default or foreclosure on an FHA loan. A spouse's lack of income or credit typically affects the couple's interest rate, minimum down payment and maximum loan amount.


Lenders consider the credit histories and scores of both borrowers when determining eligibility for an FHA loan. Both borrowers must have a credit score of at least 500 to qualify for a loan with a 10 percent down payment, or 580 to qualify for one with a down payment of only 3.5 percent. A couple in which one spouse has a credit score of 499 is ineligible for FHA-insured financing. An adverse entry on your spouse's credit report -- such as a foreclosure in the last year -- could disqualify you for an FHA-insure loan, even if his credit score is sufficiently high.


The lender combines the incomes of both borrowers to determine the maximum monthly payment the couple can afford. Both spouses must have verifiable employment to count their income, or verifiable non-employment income that they can prove will persist for the first three years of the loan. A spouse with no income can also qualify for an FHA loan if his spouse makes sufficient income. In addition to income, the lender considers the monthly debt load of both borrowers. Credit card payments, auto loans, family support and personal loans a spouse is obligated on impact the couple's debt-to-income ratios, regardless of that spouse's income status. The FHA allows for benchmark DTIs of 31 percent for a housing payment and 43 percent for total monthly obligations.


A borrower who wants to remove her spouse from the FHA loan may do so by way of a refinance. She must qualify for the new loan on her own merits by demonstrating sufficient income, credit and assets for the new FHA loan. A borrower whose spouse is ineligible for an FHA loan must qualify alone. Depending on statutory requirements in her locality, the non-borrowing spouse may have to sign a document relinquishing ownership rights to the home.


About the Author

K.C. Hernandez has covered real estate topics since 2009. She is a licensed real estate salesperson in San Diego since 2004. Her articles have appeared in community newspapers but her work is mostly online. Hernandez has a Bachelor of Arts in English from UCLA and works as the real estate expert for Demand Media Studios.

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