Can You Get a Home Loan by Using One Person's Credit Score and Another Person's Income?

A joint mortgage application isn't always the way to go.

A joint mortgage application isn't always the way to go.

When you apply for a joint mortgage loan, the lender is going to take a look at both of your incomes and credit scores. It can complicate the mortgage approval process if only one of you has a high credit score and the other the higher income. When a couple’s incomes and credit scores don’t jive, qualifying for a mortgage loan can be a problem.

How Mortgage Loans Work

When one of you has a low credit score, it’s not only going to affect whether you qualify for a loan, but also how much you have to pay for a loan a lender may give you. Lenders generally base their decision on the lower of the two credit scores, so even if your credit score goes through the roof you'll pay a higher mortgage rate if your other half has credit problems. The lower the score the higher the interest rate you’re going to pay on a loan.

Income

Your income plays a major role when you’re trying to get a mortgage loan since mortgage lenders are particularly interested in your debt-to-income ratio. A lender will want to know that by taking on a mortgage loan, you won’t be cutting yourself short. On average, your housing expenses should not total more than 28 percent of your gross monthly income. Housing expenses plus any other monthly debts you owe shouldn’t exceed 36 percent. While two incomes typically are better than one, if the partner who earns the higher income is the person with the low credit score, you may still have a problem getting a loan even with your combined incomes. Despite a high credit score, one income alone might not be enough to get you the loan if you apply individually.

Credit Scores

If one partner’s credit score is so low that it would disqualify you for a home loan if you apply for a mortgage jointly, the partner with the higher credit score might want to apply for the loan. Even if your income isn’t as high as your spouse’s, you may stand a better chance as a sole applicant if you have a high credit score. Making a large down payment on the house you want to buy may compensate for a lower income and help you get a lower interest rate. Having enough money in a savings account to cover at least 12 months of mortgage payments if you run into trouble may also give you a better crack at getting the loan.

Legal Issues

When one spouse has bad credit, taking out a mortgage loan in the other spouse’s name can get you a lower interest rate as long as that spouse has good credit and an adequate income. While only the name of the spouse who submits the mortgage application will appear on the loan documents, both your names can still be on the deed to the home. This gives each of you ownership in the home even if only one of you is legally responsible for repaying the debt.

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