Adding a Nonworking Spouse to a Mortgage

Your spouse has rights to your home, even if you owned it before you were married. If you go to refinance that property, you need to add your spouse to the mortgage, even if he or she is unemployed. If your spouse isn't working, you have to qualify based solely on your income, but you are both liable for the loan.


When you add a nonworking spouse to a mortgage as co-borrower, she becomes equally liable for the repayment, regardless of lack of revenue. You will have to qualify based on your income alone, but your spouse can still sign with you. The issue for your spouse as co-borrower is that any non-payment reported to the credit bureaus will affect her credit as well as yours.


Another way to add a spouse to a mortgage is through a guaranty. Since this means that your spouse agrees to pay the mortgage in the event you can’t, it is extremely rare for a non-working spouse to guaranty the loan. The only way a lender will accept a guarantor with no income is if she has significant liquid assets – that is, assets that can be easily converted to cash to pay the loan. Delinquency does not show on a guarantor’s credit report, but the lender can take legal action against her unless she steps in when you don’t pay.


A non-working spouse doesn’t necessarily have to be liable for the loan. She does, however, have to pledge her portion of the collateral, because she has an ownership interest in the home. The process where a non-borrower pledges collateral to secure a borrower’s obligations is known as hypothecation. This means that she agrees to offer her collateral to secure the loan -- that is, she will allow the home to be foreclosed upon, if it comes to that -- even though she is not directly liable for the loan.


When you add your spouse to a mortgage as a co-borrower, she will need to sign a complete set of loan documents, especially a promissory note and mortgage. If you add her as a guarantor, she will execute a guaranty agreement. If she hypothecates the mortgage, she will sign the mortgage document which will contain a clause with language similar to, “Jane Doe hereby pledges the collateral at 123 Main Street, Anytown, USA to secure the $200,000 mortgage note to John Doe dated March 1, 2013.” If she is not on the deed, the lender will require her to sign a spousal consent form indicating that she is aware of and consents to the lien being recorded against her marital residence.

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